BANKING AFFAIRS

Detailed explanation-1: -Call money is any type of short-term, interest-earning financial loan that the borrower has to pay back immediately whenever the lender demands it. Call money allows banks to earn interest, known as the call loan rate, on their surplus funds. Call money is typically used by brokerage firms for short-term funding needs.

Detailed explanation-2: -An interbank call money market is a short-term money market which allows for large financial institutions to borrow and lend money at interbank rates. The loans in the call money market are very short, usually lasting no longer than a week.

Detailed explanation-3: -The call money funds can move swiftly among broking firms and lenders. Hence, the call money funds are one of the most liquid assets appearing in the balance sheet of brokerage companies. If the bank which has lent the money calls the funds, then the broking firm may go onto issue margin calls.

Detailed explanation-4: -’Call Money’ is the borrowing or lending of funds for 1day. Where money is borrowed or lend for period between 2 days and 14 days it is known as ‘Notice Money’. And ‘Term Money’ refers to borrowing/lending of funds for period exceeding 14 days.

Detailed explanation-5: -The call money market is an essential part of the Indian Money Market, where the day-to-day surplus funds (mostly of banks) are traded. The money market is a market for short-term financial assets that are close substitutes of money.