What is Call Money ?
Money borrowed or lent for a day or overnight.
In the Indian money market, the inter-bank market for short-term funds is divided by the tenor of the loan into call money, notice money and term money.
Call money is money borrowed or lent on an overnight basis, that is, for one day. It is used by banks mainly to meet their day-to-day liquidity and cash reserve requirements, and the rate charged is the call rate.
Notice money is money borrowed or lent for a period of more than one day and up to 14 days. Periods of up to 3 or 7 days therefore also fall within notice money and not call money.
Term money refers to such borrowing or lending for a period of 15 days up to one year.
Hence, Money borrowed or lent for a day or overnight.
Similar Questions
Assertion (A) : A well developed money market is the basis for an effective monetary policy. It is in the money market that the Central Bank comes into contact with the financial sectors of the economy as a whole and it is through the liquidity in the market that influence the cost and availability of credit.
Reasoning (R) : A well organised money market is an essential condition for the successful operation of the Central Banking policies, and for holding the conditions of liquidity within the bounds of what the monetary authorities consider desirable.
Identify the incorrect statement(s), regarding money market, among the following :
(a) The call money market deals in short term finance repayable on demand, with a maturity period varying from one day to 14 days.
(b) Treasury bills are instruments of short-term borrowing by the Government of India, issued as promissory notes under discount.
(c) A reduction in the repo rate helps banks to get money at a cheaper rate.
(d) Money market mutual funds invest money in specifically, high-quality and very short maturity-based money market instruments.
Codes :
LIBOR term is used for :
Important Questions from Money Market
The interest rate at which the Reserve Bank absorbs liquidity from banks under the Liquidity Adjustment Facility (LAF), on an overnight basis, against the collateral of eligible government securities, is called _____.
When the general interest rate reaches a very low level, which of the following statements will be correct?
Which of the following statements are true in context of efficient market?
A. Equilibrium rates of return will prevail
B. Investor cannot earn a positive return
C. Volatility will be very high
D. Securities of listed firms sell at their fair values
E. Investors are generally risk-averse
Choose the most appropriate answer from the options given below:
The words 'Bulls and Bears' are associated with
In economics dictionary, what is the full form of NSDL?
