Overview - Organised and unorganised Money

Overview - Organised and unorganised Money

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The money market is a crucial component of any economy, and it is essential to understand the difference between organised market and unorganised market. An organised money market refers to a part of the financial market that is regulated and governed by the government and regulatory bodies. In contrast, the unorganised money market refers to the informal and unregulated sector of the financial market.

The primary difference between organised and unorganised money market is that the former has well-defined rules and regulations that govern the operations of financial institutions, transactions, and products. These regulations are designed to protect the interests of consumers, investors, and the economy as a whole while the unorganised money market operates outside the purview of government and regulatory bodies often resulting in exploitative practices and increased financial instability. This market includes informal lenders, such as moneylenders and pawnbrokers, who 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 high-interest rates and predatory lending practices that trap borrowers in a cycle of debt.

The difference between the organised and unorganised sector of the money market is that the former is characterised by formal financial institutions, such as banks, credit unions, and insurance companies, while the latter consists of informal lenders and other unregulated financial institutions. The organised sector of the money market is subject to regulation and oversight by the government and regulatory bodies, while the unorganised sector is not.

Another difference between the organised and unorganised market is the level of transparency. The organised money market is characterised by high levels of transparency, with financial institutions required to provide detailed information about their operations, transactions, and products. In contrast, the unorganised money market operates in a relatively opaque manner, with little to no transparency or accountability.

In conclusion, the organised and unorganised money markets differ significantly in terms of regulation, oversight, transparency, and the types of financial institutions that operate within them. The organised money market is characterised by formal financial institutions that are subject to regulation and oversight by the government and regulatory bodies, while the unorganised money market consists of informal lenders that operate outside the purview of government and regulatory bodies. As such, it is essential to understand the differences between these two markets to make informed decisions when it comes to financial transactions and investments.