Understanding the Call Money Market in India

Understanding the Call Money Market in India

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The Call Money Market is the Organized Money Market's most crucial component. It specializes in one-day call loans and cash advances. The Call Money Market is also known as the Interbank Call Money Market due to the majority of participants being banks. The Call Money Market's demand side is made up of banks that temporarily lack funds, while the supply side is made up of banks that temporarily have more funds. The following are the main characteristics of the Indian Call Money Market:

(i) The institutional arrangement for making some banks' temporary surplus available to other banks that are temporarily short of funds is provided by the Call Money Market.

(ii) The Call Money Market is primarily populated by banks. The State Bank of India always acts on behalf of lenders in the market.

(iii) The Call Currency Market works through merchants who generally stay in contact with banks and lay out a connection between the getting and loaning banks.

(iv) There is a lot of competition in the Call Money Market, which is very sensitive. Thusly, it goes about as the best sign of the liquidity position of the Coordinated Currency Market.

(v) The Call Money Market's interest rate is extremely volatile. It quickly goes up when there is too much demand for money, and it quickly goes down when there is too much money available.

vi) The country's banking system is improved and the day-to-day fluctuations in the reserve positions of individual banks are eliminated thanks to the Call Money Market.