BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It is an overnight loan in the money market
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It is loan of above 1 day to 14 days in the money market
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It is loan of above 14 day to 364 days in the money market
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None of the above
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Detailed explanation-1: -Call money is minimum short-term finance repayable on demand, with a maturity period of one to fourteen days or overnight to a fortnight. It is used for inter-bank transactions. The money that is lent for one day in this market is known as “call money” and, if it exceeds one day, is referred to as “notice money."
Detailed explanation-2: -What is overnight call money rate? Overnight call money rates, the interest rates at which banks lend money to each other, are on the rise despite liquidity remaining in the surplus mode.
Detailed explanation-3: -’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-4: -Call money is a very short-term bank loan that does not contain regular principal and interest payments. It is often used by brokerage firms to finance margin accounts. Call money does not have to follow a fixed schedule, nor does the lender have to provide any notice of repayment. Was this answer helpful? 0.
Detailed explanation-5: -(3) Call Money: Call money is a method used by commercial banks to borrow funds from each other, in order to maintain the Cash Reserve Ratio (CRR). Cash Reserve Ratio is the minimum balance of cash to be maintained by banks, according to RBI guidelines. (a) It is short-term finance repayable on demand.