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ON
MONETARY MANAGEMENT
Money market instruments in India
Presented by
L.Lavanya MBA(banking and insurance)
trade bill
promisary note
treasury bill
commercial paper
certificates of deposited
These are called as popular money market
instrument
It is a market for borrowing and lending of short
term money
money market instrument:
every country have
money market
capital market
Money market commercial bankers are dominant
player
Trade bill:
Promisary note:
Treasury bill:
Treasury bill
it is decided by the government according to their requirement
They always issued at discount at face value (I.e.) interest is hiden
Issue price: example
facevalue-10000
Issue price-9000
Maturity value- 10000
(i.e.) 1000-intrest
Treasury bill can bought and sold in the money market
when the investor in need of money he can sell the money in
bank
Commercial papers:
Commercial paper are short term debt securities issued by
reputed
companies in order to meet their working capital needs
Every enterprise need fixed capital and working capital
Till 1990s commercial bank are the loan provided for the
company to full fill the working capital
It period is 3months-1year
It can be issued only to the reputed company
A company which is enjoying a good credit tarting can go for
commercial bank
it will be in the form of usance promisary note and they will
also issued at
discount to the face value
Commercial paper are also high value instrument and mothy
delt with instutional investor
Certificate of deposit:
certificate of deposit is an short term security issued by the
commercial bank
They are issued for maturity period of one year
They are high value instrument
They are only in laksh of rupees not in thousand
They are also issued at the face value
Commercial banks are issued by the government. the
certificate of deposits issued by the commercial bank
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