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TI & RM | IIBF CERTIFICATION | Money Market | Part 1 [FREE EPDF]

Have you ever wondered how short-term borrowing and lending take place in financial markets? Or how banks, governments, and corporations manage their liquidity? If you’re preparing for the Treasury Investment & Risk Management Diploma, understanding the Money Market is crucial.

The Money Market is an integral part of the financial system that allows entities to borrow and lend funds for short durations, generally less than one year. It consists of various financial instruments that enable banks, corporations, and governments to manage their short-term financing needs efficiently.👉 Before we dive in, watch this video for a complete breakdown:

What is Money Market?

The Money Market is a crucial segment of the financial system that facilitates the trading of short-term financial instruments with high liquidity. It helps businesses, banks, and governments manage their short-term funding needs efficiently.

Key Features of Money Market:

  • ✅ Short-term borrowing & lending (maturity less than 1 year)
  • ✅ Highly liquid financial instruments
  • ✅ Regulated by the Reserve Bank of India (RBI) in India
  • ✅ Helps in economic growth by funding industries and businesses
  • ✅ Plays a crucial role in monetary policy implementation
  • ✅ A safe investment option for risk-averse investors

Key Instruments of Money Market

Treasury Bills (T-Bills)

Issued by: Central Government

Purpose: Manage cash flow and short-term funding

Maturity: 91 days, 182 days, 364 days

Risk-Free investment

Call Money & Notice Money

Used for: Inter-bank borrowing

Call Money: Maturity of 1 day

Notice Money: Maturity of 2 to 14 days

IIBF CERTIFICATION TI & RM 2025 | All about Financial Marketing

Certificate of Deposit (CDs)

Issued by: Scheduled Commercial Banks

Purpose: Time deposit with a fixed tenure

Commercial Paper (CPs)

Issued by: Corporates & Financial Institutions

Purpose: Short-term funding requirement

Cash Management Bills (CMBs)

Issued by: Central Government

Purpose: To manage temporary cash mismatches

Bill Rediscounting Scheme (BRDS)

Used by: Banks & financial institutions

Purpose: Discounting trade bills to provide liquidity

Key Participants in Money Market

Reserve Bank of India (RBI)

  • Regulates & implements monetary policy
  • Manages liquidity through OMO (Open Market Operations)
  • Controls money supply & inflation

Central & State Governments

  • Issue T-Bills & CMBs for short-term borrowing
  • Helps in managing fiscal deficit

Commercial Banks

  • Trade in Call/Notice/Term Money for liquidity adjustments
  • Invest in Government Securities & CDs

📥 Download the PDF Guide

👉 Click Here to Download

 

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