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DHFI and Money Market

Money Market

Money Market refers to a section of the financial


market where financial instruments with high liquidity
and short-term maturities are traded
DFHI

DFHI was set up in March 1988 by Reserve Bank of


India jointly with public sector banks and all India
Financial Institutions to develop the money market and
to provide liquidity to money market instruments
Objectives and Role
• Promote secondary market
• Integrate market
• Provide safety
• Develop money market
• Provide liquidity
• To advise
• To mobilize funds
Treasury Bills (T-Bills)
A Treasury Bill is a promissory Note issued by the
Government under discount for specified period
therein.

• Amount
• Maturity
• Issuer
Features
• Safety
• Liquidity
• Ideal Fund management
• Non-inflationary
• Hedging Facility
Certificate of Deposit (CD)
A CD is a certificate issued by bank to a person
depositing money for specified period at a specified
rate of interest.
• Amount
• Maturity
• Issuer
Features
• Transferability
• Maximum Liquidity
• Returns
• Vehicle to raise resource
Commercial Papers (CP’s)

Commercial Paper is an unsecured money market instrument


issued in the form of promissory note.

• Amount
• Maturity
• Issuer
Features
• Simplicity
• Flexibility
• High Returns
• Movement of Funds
Repurchase Agreement
• Repurchase agreement is a form of lending and
borrowing used by central bank and near banking
institutions all over the world to manage liquidity.
Features
• For big investors
• Manage liquidity
• Government Interference
Call Money Market

The Call Money Market (CMM) is the market where


overnight (one day) loans can be availed by banks to
meet liquidity.
Features
• Parking place for surplus Fund
• Very liquid
• Helps central bank
• Highly sensitive
• Overnight market
Money Market Mutual Fund

A Money Market Mutual funds (MMMF) is a type of


mutual fund that invest in high liquidity, short-term
debt instruments, cash and cash-equivalent
Feature
• Less volatile
• Less prone to market fluctuations
• Less interest rate risk
• Parking place for cash reserves
Summary
Money
Market

Organized Unorganized

RBI Brokers

DFHI Dealers

Chit funds
Treasury
Bills
Certificate
of Deposit
Commercial
Papers
DFHI
Repos

MMMF

Call Money
Market

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