Financial Market

Different markets existing in Indian Financial system can be broadly grouped as follows:

1) Call Money Market

2) Treasury Bill Market

3) Commercial Bills Market

4) Markets for Commercial Papers and Certificates of Deposits.

5) Stock Markets

Call Money Market

          Call Money Market is a Market for very short-term Instruments with a maturity of one day to a fortnight. Since Commercial banks are the major players in this market for temporary inter-bank loans, this market is also called Inter-bank call Money Market. This market is located in big industrial and commercial metros.

Treasury bill Market

         Treasury Bill Market is a market wherein the Government raises short-term funds though 91-day Treasury Bills or 182-day Treasury Bills. Treasury Bills are issued at discount by RBI on behalf of the Central Government either through Tenders or on Tap. Treasury Bills are purchased by RBI, Commercial Banks, State Governments, LIC, and UTI for temporary parking of their funds. The Discounting and Financing House of India (DFHI) provides a Secondary Market for Treasury Bills.

Commercial Bills Market

         Commercial Bill is a short-term, negotiable and self-liquidating money market instrument. The normal maturity period for different bills varies. The insurance bill 30 to 120 days, the export bills 90 days, import bills 60 days, internal Trade bills 90 to 180 days. The Commercial Bills are permitted to be discounted or rediscounted by all scheduled Commercial Banks, LIC, GIC, FIs, SBI Mutual Fund, Canbank Mutual Fund, DFHI, NABARD, EXIM Bank, etc.

Commercial Paper Market

         Two new money market instruments-CDs and CPs have entered the Indian Markets since 1990s. CPs is usually issued in large denomination by leading, nationally reputed, highly rated creditworthy large manufacturing and Finance companies for 3 to 6 months. CDs are marketable receipts in bearer or registered form of funds deposited in Banks for a specified period. Banks issue CDs to compete with other financial intermediaries.

Stock Markets

        Industrial Securities are traded in two markets. One is the new issue (Primary Market) and the other is the Stock Exchange (Secondary Market). Presently, there are about 23 Stock Exchange in India trading listed securities to provide liquidity to existing shareholders. The newer institutions, like, OTCEI, CRISIL, SHCIL and SEBI are working towards healthier growth and development of stock markets in India.