Money Market – Organised and Unorganised

Money Market – Organised and Unorganised

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The financial market is categorized into organized and unorganized sectors. An organized sector - is one that operates under the legal framework of a country, while the unorganized sector does not adhere to any legal framework. In the money market, the organized sector includes banks, financial institutions, and other regulated entities, whereas the unorganized sector consists of unregulated entities such as money lenders, chit funds, and other informal financial intermediaries. This essay aims to contrast and compare organized and unorganized sector along with the money market.

The organized sector is characterized by a well-established regulatory framework that ensures transparency, accountability, and standardization of financial transactions. In contrast, the unorganized sector is largely unregulated, leading to a lack of transparency and accountability, which exposes borrowers and lenders to risks. The organized sector enjoys the trust of customers and investors, which enhances their ability to mobilize savings and funds at lower costs than the unorganized sector. The organized sector is further divided into formal financial institutions such as banks, insurance companies, mutual funds, and other regulated entities.

The difference between organized and unorganized financial institutions is significant. The organized sector's financial institutions are highly regulated and adhere to stringent regulatory standards, ensuring their reliability, stability, and security. In contrast, the unorganized sector's financial institutions are not regulated, exposing customers to higher risks of fraud, default, and bankruptcy. The organized financial institutions' operating costs are also relatively lower than those of the unorganized sector, which leads to lower interest rates on loans and other financial products.

The difference between the organized and unorganized financial markets is also significant. The organized financial market is highly developed, offering a wide range of financial products such as savings accounts, fixed deposits, insurance, mutual funds, stocks, and bonds. In contrast, the unorganized financial market is characterized by the absence of a formal market structure, lack of transparency, and standardization. The unorganized financial market refers to the informal and unregulated sector of the financial market. It is characterized by transactions that occur outside of the purview of government and regulatory bodies. The unorganised financial market includes informal lenders, such as moneylenders, pawnbrokers, and other informal financial institutions. These lenders offer credit to individuals and small businesses that may not have access to formal banking channels. However, the lack of regulation and oversight can lead to exploitative lending practices and increased financial instability.