Understanding the Organised Money Market

The money market is a key part of the financial system where short-term funds are borrowed and lent. It deals with financial assets that have a maturity period of less than one year. In many countries, like India, the money market is broadly divided into two sectors: the organised sector and the unorganised sector.

The organised money market includes institutions that are regulated and controlled by the country's Central Bank (like the Reserve Bank of India in India). These institutions follow strict rules and regulations set by the Central Bank, ensuring a certain level of transparency and stability in their operations.

Components of the Organised Money Market

The organised sector of the organised money market typically comprises various institutions that are formally recognised and regulated. These include:

• The Central Bank (acting as the regulator and lender of last resort).
• Commercial Banks (both public and private sector banks).
• Regional Rural Banks (RRBs).
• Cooperative Banks.
• Development Financial Institutions (DFIs) that participate in the money market.
• Other financial institutions regulated by the Central Bank.

These entities actively participate in money market instruments like Treasury Bills, Commercial Paper, Certificates of Deposit, Call Money, etc., all under the purview of the Central Bank's monetary policy and regulations.

The Unorganised Money Market and Indigenous Bankers

In contrast to the organised money market, the unorganised sector consists of financial intermediaries that are not directly regulated by the Central Bank. A prominent part of the unorganised sector are the Indigenous bankers.

Indigenous bankers are individuals or private firms that receive deposits and lend money, often following traditional methods. They might include Shroffs, Mahajans, Chettis, etc. They play a significant role, especially in providing credit to small traders, farmers, and businesses, particularly in rural and semi-urban areas, but they operate outside the formal regulatory framework of the Central Bank.

Analyzing the Given Options

Let's look at the provided options in the context of the organised money market:

• Central Bank: The Central Bank is the apex body regulating the organised money market. It is very much a part of the organised framework, though distinct in its role as supervisor.
• Commercial Banks: Commercial Banks are key players in the organised money market. They are heavily regulated by the Central Bank and form the backbone of the formal banking system.
• Indigenous bankers: Indigenous bankers operate outside the direct control and regulation of the Central Bank. They belong to the unorganised sector of the money market, not the organised one.
• Regional Rural Banks: Regional Rural Banks were established to provide banking services in rural areas. They are scheduled banks regulated by the Central Bank and are considered part of the organised financial system.

Based on this analysis, Indigenous bankers are the ones who are not part of the organised money market as they fall under the unorganised sector.