The document lists several names and entities involved in the money market: Stuti, Kanika, Parag, Kush, Abhinav, Mayank Arora, Reserve Bank of India, Discount and Finance House of India, mutual funds, corporate investors, non-banking finance companies, Securities Trading Corporation of India, commercial banks, co-operative banks, non-banking financial institutions, indigenous banks, money lenders. It then lists several money market instruments: treasury bills, call/notice money, commercial paper, certificates of deposits, commercial bills, collateralized borrowing and lending obligation. It provides details on treasury bills, commercial paper, and the Liquidity Adjustment Facility which

1. STUTI .
KANIKA.
PARAG.
KUSH.
ABHINAV.
MAYANK ARORA.

2.  The money market is a market for financial assets that are close
substitute for money. It is a market of short term funds and
instrument having maturity period less than 1 year or 1 year.
 MAIN PLAYERS OF MONEY MARKET ARE AS
FOLLOWS……
 Reserve bank of India ( RBI ).
 The Discount and Finance House of India ( DHFI ).
 Mutual Funds , Corporate Investors ,
 Non Banking finance Companies ( NBFC ).
 The Securities Trading Corporation of India ( STCI ).

3.  RBI
 COMMERCIAL BANKS
 CO-OPERATIVE BANKS
 NON BANKING FINANCIAL INSTITUTIONS
 INDEGENEOUS BANKS
 MONEY LENDERS

4.  Treasury bills ( t- bills )
 Call / Notice money
 Commercial Paper ( CPs )
 Certificates of Deposits ( CDs )
 Commercial Bills ( CBs )
 Collateralized Borrowing and Lending
Obligation ( CBLO )

5.  T – bills are short term instrument used by the government to raise
short term funds.
 Issue t discount and redeem at par.
 They are negotiable instrument.
 Bank, retail institution, organization institution , can purchase t-
bills & individual can not purchase.
 It can be issue trough auction.
 It is available for a minimum amount of Rs 25000 and in multiples.

6.  Unsecured short term promissory Note,
 Issued by Company having tangible net worth of Rs.
4 cr, Primary Dealers & FIs.
 Rating shall be taken b4 issuing. Minimum rating is
P2 by CRISIL, A2 by ICRA & PR2 by CARE.
 Maturity-Minimum 7 days & Maximum 1 year.
 Investment in CP can be done by
individuals, banks, corporates, NRIs, & FIIs.
 The RBI publishes the rates of interest on CP on
monthly as well as weekly basis.

7. EQUILIBRIUM IN FINANCIAL MARKETS
(a) Supply and demand for loanable funds and determination of
interest rate
Interest rate
Sf (lending)
S’f
ie
i’e
Df
(borrowing)
0 A B
Amount of loanable funds

8. (b) Supply and demand for securities and determination of prices
Price
SS (borrowing)
P’e
Pe
D’s
Ds (lending)
0 A’ B’
Amount of securities

9.  Repos
(a.)Inter-bank repo.-%
(b.) RBI’s repo
( i.) Repo Rate.—6.75%
(ii.) Reverse Repo Rate.—5.75%
 Bank rate.--6%
 Interest rate.--%VVVVVVVVVVVVVVVVVV
 S.L.R.--24%
 C.R.R--6%

10. MONEY MARKET RETURNS
• Interest Rate
Function of the unit of account, maturity, and default risk
• Rate of Return on Risky Assets
Cash dividend Ending price – Beginning price
r= +
Beginning price Beginning price
Dividend yield Capital yield
• Inflation and Real Interest Rate
1 + Nominal rate
1 + Real rate =
1 + Inflation rate

11. DETERMINANTS OF RATES OF RETURN
• Expected Productivity of Capital
• Degree of Uncertainty about the Productivity of
Capital
• Time Preferences of People.
• Degree of Risk Aversion.

12. The LAF is the tool of day to day liquidity management through sales
and purchase of securities or resale / repurchase under the
repo/reverse repo operation
LAF is a tool for managing day to day liquidity mismatches in the
system, restricting & steering short term money market rates in
accordance to monetary policy objectives.