comparison - money market instruments

1. COMPARISON BETWEEN
INDIAN ANDINTERNATIONAL
MONEY MARKET INSTRUMENTS
BY
RENJU RAJU
MBA
4TH SEMESTER

2. MONEY MARKET
• Money Market is a market for borrowing and
lending short term funds.
• Money market instruments are those
instruments, which have a maturity period of less
than one year.
• The major players in the money market are RBI,
Discount and Finance House of India (DFHI),
Banks, Financial Institutions , Mutual Funds ,
Government and Big Corporate Houses.

3. DEFINITION
RBI defines money market as
“ a market for short term financial assets
that are close substitute for money, and
facilitates the exchange of money in
primary and secondary market ”

4. FEATURES OF MONEY
MARKET
• No geographical constraints
• Wholesale market for short term debt instruments
• Money or monetary assets
• Market purely for short term funds
• It is not a single homogeneous market
• No fixed place
• Transactions can be conducted with or without the help
of brokers

5. STRUCTURE OF INDIAN
MONEY MARKET

6. MONEY MARKET INSTRUMENTS
Money market instruments facilitate transfer of
large sum of money quickly and at low cost from
one economic unit to another for relatively shorter
period of time.
The maturity period of these instruments may
vary from one day to one year.

7. IMPORTANT MONEY MARKET
INSTRUMENTS
• Commercial Paper (CPs)
• Certificate Of Deposits (CDs)
• Treasury Bills (T-BILLs)
• Inter-bank Participation Certificate (IBPCs)
• Commercial Bills (CBs)
• Call Money
• Repurchase Agreement (REPOs)
• Inter – Corporate Deposits (ICDs)
• Collateralized Borrowing And Lending Obligations
(CBLO)

8. INTERNATIONAL MONEY
MARKET INSTRUMENTS
• Treasury Bills
• Commercial Paper
• Banker Acceptances
• Repurchase Agreements
• Foreign bonds & euro
bonds
• Global bonds
• Straight bonds
• Floating rate notes
• Convertible bonds
• Cocktail bonds
• ADR
• GDR

9. DIFFERENCES BETWEEN
INDIAN AND INTERNATIONAL MONEY
MARKET
BASIS FOR
COMPARISON
INDIAN MONEY MARKET INTERNATIONAL MONEY
MARKET
Area served Small Large
Government
Interference
Less Comparatively high
Risk factor Low high
Currency Indian rupees dollar or any other currency
Legal formalities less more

10. DIFFERENCE BETWEEN
INDIAN BOND AND EURO BOND
INDIAN BOND
• Bond issued by Indian
company
• underwritten by the
underwriters in India
EURO BOND
• But in case of euro bonds
they are dominated in
currency other than the
currency of the country
where the bonds are
issued
• Euro bonds underwritten
by the underwriters of
multi nationality

11. DIFFERENCE BETWEEN
INDIAN BOND AND EURO BOND
INDIAN BOND
• Indian bonds subjected to
governmental rules and
regulations in India
• Indian bonds is
determined keeping in
mind the investors of
India.
EURO BOND
• Euro bonds are free from
rules and regulations.
• Euro bond are tailored to
the needs of the
multinational investors.