BANKING AFFAIRS

Detailed explanation-1: -It is not exclusively used by banks. Interbank call money market customers can include other financial institutions, mutual funds, large corporations, and insurance companies. Entities transacting within the interbank call money market seek short term loans. Loans typically have a duration of one week or less.

Detailed explanation-2: -The inter-bank call money market is an overnight market that mainly assists commercial banks in meeting their immediate liquidity requirements by facilitating lending and borrowing among banks. These transactions are very short term in nature and reflect demand for and supply of liquidity in the market.

Detailed explanation-3: -The Reserve Bank regulates financial markets within the overarching statutory framework of the Reserve Bank of India Act, 1934, the Government Securities Act, 2006, Foreign Exchange Management Act, 1999, the Bilateral Netting of Qualified Financial Contracts Act, 2020 and the Payment and Settlement Systems Act, 2007.

Detailed explanation-4: -Participants of Call Money Market in India Banks, Primary Dealers (PDs), Development Finance Institutions, Insurance companies, and select Mutual Funds are currently participants in the call money market. PDs and banks can act as both borrowers and lenders in the market.