Money market Refers to the segement of that system /market that enables the raising of short term funds

for earning returns. Commercial banks,financial intermediatries,large coarporation and the resevbank of india !

SOURCE: Indian financial system by M Y KHAN

THE CENTRAL BANK OF INDIA

Reseve bank of India

The (Reseve bank of India )RbI is most important constituent of the money market organization Aims are 1)To ensure that liquidity and shorterm interest rates are maintained at levels consistent with the monetary policy objective of maintaining price stability 2)To ensue an adequate flow of credit to the productive sector of the economy 3)To bring about order in forex market .

SOURCE:Indian financial system by M Y KHAN

ROLES OF RBI
1)Note issuing authority/issuer of authority of currency 2)Government banker 3)Bankers bank

4)Exchange control authority

5)Regulator of money and credit /monetary authority

SOURCE:Indian financial system by M Y KHAN

1) Note issuing authority/issuer of authority of currency

Sole right/authority/monopoly to issue currency note other than one rupee note/coin and coin of smaller denomination (issued by central government) By ISSUE DEPARTMENT of RBI through regional office/sub offices Enhancement in security features of currency notes Technology upgradation

SOURCE:Indian financial system by M Y KHAN

2) Government banker
Acceptance of deposits. Withdrawal of funds Making payments or receiving on behalf of government Manages funds like calamity relief funds ,administers schemes for disbursal of the pension of government employees and so on

SOURCE:Indian financial system by M Y KHAN

3) Bankers Bank

Major bussiness of RBI It controls the volume of reserves and determines their deposits credit-creation ability The banks holds all/part of reserves with the RBI and borrow it if needed

RBI is baker/lender of last resort i.e It is ultimate source of money and credit in india

SOURCE:Indian financial system by M Y KHAN

Regulator of money and credit/monetary Authority

In following way Bank rate Cash reserve ratio(CRR) Statutaory liquidity ratIo(SLR)

Liquidity adjustment ratio(LAF)

Repo/reverse Repo rate Types of repo 1)inter bank repo 2)RBI REPO

SOURCE:Indian financial system by M Y KHAN

Bank rate :
Standard rate at which RBI charges on advances on specified collaterals to bank. i.e INCREASE in B/R will increase in lending rate of banks.

Cash Reserve ratio (CRR): Cash wich banks have to maintain with RBI as percentage of their demand and time liability Objective is to ensure the safety and Liquidity of bank deposits Penal interest-above B/R

SOURCE:Indian financial system by M Y KHAN

Statutory Liquidity ratio (SLR): Ratio of cash in hand (excluding CRR) to total demand and time liabities of the banks To restrict the expansion of bank credit To augment a banks investment in government security To ensure the solvecy of the bank Liquidity Adjustment Facility (LAF): Refinancing in General formate

SOURCE:Indian financial system by M Y KHAN