BANKING AFFAIRS

Detailed explanation-1: -The call/notice money market is the most important segment in the Indian money market.

Detailed explanation-2: -The main money market instruments are Treasury bills, commercial papers, certificate of deposits, and call money. It is highly liquid as it has instruments that have a maturity below one year. Most of the money market instruments provide fixed returns.

Detailed explanation-3: -The Indian monetary market has two broad categories – the organized sector and the unorganized sector. Organized Sector: This sector comprises of the governments, the RBI, the other commercial banks, rural banks, and even foreign banks.

Detailed explanation-4: -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-5: -Call money allows banks to earn interest, known as the call loan rate, on their surplus funds. It consists of overnight money and money at short notice for a period of upto 14 days. The call money market essentially serves the purpose of equilibrating the short-term liquidity position of banks and other participants.