Money Market - Quick Revision Sheet
Quick revision
Key facts
| Item | Fact |
|---|---|
| Maturity | Not exceeding one year |
| Definition of near money market | Crowther |
| Nerve centre | Commercial banks |
| Regulator | Central Bank |
| New instruments after | 1986 |
| Treasury bill periods | 91, 182 and 364 days |
| 91 days bill discount rate | Fixed 4 per cent |
| Treasury bill minimum | Rs 25,000 |
| CD or CP minimum | Rs 5 lakhs |
| Commercial bill periods | 30, 60 and 90 days |
| Issuer of government securities | Public Debt Office of the RBI |
| Oldest money market | London; New York second |
Terms
| Term | Meaning |
|---|---|
| Cut off rate | Discount rate on 364 days bills quoted in auction and accepted |
| Grooming | RBI acquiring securities nearing maturity to ease redemption |
| Switching | Buying one security against the sale of another |
| Auctioning | Sale to the highest bidder |
| Accommodation bill | Not from genuine trade |
| Documentary bill | Carries documents of title to goods |
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