MONEY MARKET INSTRUMENTS
The money market in India is an important source of finance to industry, trade, commerce and the government sector for both national and international trade through bills–treasury/commercial, commercial papers and other financial instruments and provides an opportunity to the banks to deploy their surplus funds so as to reduce their cost of liquidity. The money market also provides leverage to the Reserve Bank of India to effectively implement and monitor its monetary policy.
The instruments of money market are characterised by
a) short duration,
b) large volume
c) de–regulated interest rates.
d) The instruments are highly liquid.
e) They are safe investments owing to issuers inherent financial strength.
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