Components of Indian Money Market

Components of Indian Money Market

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Short-term funds are demanded and supplied in the Money Market. As a result, the lenders who supply and the borrowers who demand short-term credit are the money market's primary constituents.

I. Fund Supply - In the Indian money market, there are two main sources of short-term funds:

(a) The unorganized indigenous sector includes numerous village money lenders and indigenous bankers. It is unorganized because the Reserve Bank of India does not control and coordinate its activities.

(b) The Indian money market's organized modern sector includes:

I. The Indian Reserve Bank;

II. The associate banks of the State Bank of India

III. the scheduled alongwith non-scheduled Indian joint stock commercial banks, 20 of which have been nationalized

IV. The trade banks which for the most part finance Indian unfamiliar exchange;

V. Banks with cooperatives

VI. Other special organizations like the National Bank for Agriculture and Rural Development, the Export-Import Bank, the Industrial Development Bank of India, and State Finance Corporations which indirectly participate in the money market through banks

VII. Large corporations and quasi-governmental organizations also use banks to distribute their funds to the money market

II. The Demand for Money - The principal borrowers of short-term funds on the Indian money market are: a) The Federal Government; b) The Governments of the States; c) Local bodies like municipalities and village panchayats, among others; d) farmers, exporters, importers, traders, and industrialists; and e) the general public.