Saminar on Financial Market Money Market By Sanjay Sindagi

Wel Come To All

Chapter - 2

FINANCIAL MARKETS-

Money Market

Seminar On :

What Is Financial Market?“ A Financial Market is an Financial Institution or

arrangement that facilitates the Exchange of financial instruments like Shares, Debentures, Commercial Papers, Bills and Treasury bills etc ” In other words,

“ A Financial Market is arrangement for facilitating buying and selling of financial assets or securities or financial claims”

Definitions of Financial Market According to Brigham Eugene F.

“ The Place where people and organizations wanting to borrow money are brought together with those having surplus funds is called a Financial market.“

According to investopedia.com “Broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives.”

The main aim of Financial Market is -

Link between the “Savers” and “Investors”

It Facilitates expansion of Trade and Industries over “Space“ and “Time”.

Functions of Financial market Agency Functions

Productive Use

Capital Formation

Transfer of Funds

Financial Functions Providing the Funds

Providing the Earning Assets

Providing Liquidity

Components Of Financial Market

o Primary Market

o Secondary Market

o Money Market

o Capital Market

o Debt Market

o Equity Market

o Financial Service Market

o Depository

o Non – Depository

Money Market

What is Money Market ?Money Market

Meaning of Money Market

Money Market is a market where short

term Financial Instruments, assets and claims

are traded. It is concerned with the supply and

demand for investible funds.

In other words, Money Market refers It is

market where short term fund and near money

assets are borrowed.

Money Market

Definitions of Money Market

Money Market

According to Crowther :

“It is the collective name given to the various firms and institutions that deal in the various grades of near money”

According to RBI Report :

Money Market is the centre for dealings mainly of short – term character, in money assets, It meets short term requirements of borrowers and provide liquidity or cash to the lenders.

Characteristics of Money Market

Short term Finance :

Dealings :

Existence Of Sub-Markets :

Less Risk :

Period :

Money Market

Characteristics of Money Market

Short term Finance :

Dealings :

Existence Of Sub-Markets :

Less Risk :

Period :

Money Market

Characteristics of Money Market

Short term Finance :

Dealings :

Existence Of Sub-Markets :

Less Risk :

Period :

Money Market

Characteristics of Money Market

Short term Finance :

Dealings :

Existence Of Sub-Markets :

Less Risk :

Period :

Money Market

Characteristics of Money Market

Short term Finance :

Dealings :

Existence Of Sub-Markets :

Less Risk :

Period :

Money Market

Functions of Money Market

It provides Finance to Trade and Finance :

It provides opportunity for ideal

Investment :

It effective Monitory Management :

It helps for Economic Development :

It helps for development of efficient

Banking System :

Money Market

Functions of Money Market

It provides Finance to Trade and Finance :

It provides opportunity for ideal

Investment :

It effective Monitory Management :

It helps for Economic Development :

It helps for development of efficient

Banking System :

Money Market

Functions of Money Market

It provides Finance to Trade and Finance :

It provides opportunity for ideal

Investment :

It effective Monitory Management :

It helps for Economic Development :

It helps for development of efficient

Banking System :

Money Market

Functions of Money Market

It provides Finance to Trade and Finance :

It provides opportunity for ideal

Investment :

It effective Monitory Management :

It helps for Economic Development :

It helps for development of efficient

Banking System :

Money Market

Functions of Money Market

It provides Finance to Trade and Finance :

It provides opportunity for ideal

Investment :

It effective Monitory Management :

It helps for Economic Development :

It helps for development of efficient

Banking System :

Money Market

Instruments of Money Market

Inst

rum

ents

Call Money

Notice Money or Short Term Money

Treasury Bills

Commercial Bills

Commercial Papers

Certificates of Deposits

Discount House

Acceptance House

Bill Brokers

Inter Bank Participation Certificate

Inter Corporate Deposits

1. Call Money, Notice Money or Short term Money

Inst

rum

ents

Advances made by banks to other financial institutions, or corporate and personal customers, that are repayable either upon demand (call) or within 14 days (short notice)

The call money deals in short term finance repayable on demand, with a maturity period varying from one day to 14 days. 

2. Treasury Bills In

stru

ments

Treasury bills are instrument of short-term borrowing by the  Central bank of the nation , issued as promissory notes under discount

3. Commercial Bills In

stru

ments

A commercial bill also called a bank bill or bill of exchange is a payment order directing your bank to pay a sum of money to the holder of the bill at a future time.

4. Commercial PapersIn

stru

ments

  Commercial paper is an unsecured promissory note with a fixed maturity of no more than 270 days. Commercial paper is a money-market security issued (sold) by large corporations to get money to meet short term debt 

5. Certificate Of Deposits In

stru

ments

A certificate of deposit is a promissory note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will often incur a penalty. The term of a CD generally ranges from one month to five years.

6. Discount House In

stru

ments

A discount house is a money dealer that participates in the buying and discounting of bills of exchange and other financial products such as money markets, certain government bonds and banker's acceptances. 

7. Acceptance House In

stru

ments

An acceptance house guarantees the payment of bills used to finance trade deals and goods in shipment. Its profit is the difference between the discounted amount it guarantees to pay and the full amount of the bill that it undertakes to collect from the original creditor.

8. Inter Corporate Deposits

Inst

rum

ents

An Inter-Corporate Deposit (ICD) is an unsecured loan extended by one corporate to another. Existing mainly as a refuge for low rated corporate, this market allows funds surplus corporate to lend to other corporate.

9.Repurchase Agreement

Repo is a form of overnight borrowing and is used by those who deal in Government.

Inst

rum

ents

10.Interbank participation Certificate

Inst

rum

ents

Participation Certificates, as a money market instrument were initially intended to serve as a short-term money market instrument. Participation certificates were utilized by the financial institutions for ‘parking’ their funds for increasingly long maturities and hence this instrument was not development for evening out liquidity between banks and/or financial institutions.

Pla

yers

In M

oney

Mark

et

1. Banks Pla

yers

In M

oney

Mark

et

Unorganized SectorsPla

yers

In M

oney

Mark

et

1. Indigenous Banker

II. Money lenders

III.Nidhi’s IV. Chit Funds

Findings And Suggestions

?

Conclusion :

Financial market helps mainly in finance need, where finance is

treated as life blood of every business.

Financial market act a very important role in Economic

Development also. So, It has a very wide scope in the world.

Thank You

Sanjay Tinga Rizwan

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Prepared By : Sanjay Sindagi