Consider the following statement about Call Money Market 1 Borrowing and lending of funds take place...........

Economic Affairs Financial Markets

Consider the following statement about Call Money Market:

1. Borrowing and lending of funds take place on overnight basis.

2. Participants in the call money market in India currently include all the scheduled commercial banks (SCBs), cooperative banks, insurance.

Which of the above statements is/are correct?

1 only

2 only

Both

None

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Explanation:

The call money market is an important segment of the money market where borrowing and lending of funds take place on overnight basis.
Scheduled commercial banks (excluding RRBs), co-operative banks (other than Land Development Banks) and Primary Dealers (PDs), are permitted to participate in call/notice money market both as borrowers and lenders.
Prudential limits, in respect of both outstanding borrowing and lending transactions in the call money market for each of these entities, are specified by the RBI.
Do you know?
•Other than the institutions, now individuals will also be able to participate in Open Market Operations market (as per the Union Budget 2016–17).
THINK!
•Liquidity Adjustment Facility (LAF)
•Market Stabilisation Scheme (MSS)