CALL MONEY MARKET: UPSC Daily Important Topic | 1 November 2021

CALL MONEY MARKET

• This is basically an inter-bank money market where funds are borrowed and lent, generally, for one day-that is why this is also known as over-night burrowing market (also called money at call).
• Fund can be burrowed/raised for a maximum period upto 14 days (called short notice).
• Burrowing in this market may take place against securities on without securities.
• Rate of interest in this market ‘glides’ with the ‘repo rate’ of the time the principle remains very simple-longer period, higher the interest rate.
• Depending upon the availability and demand of fund in this market the real call rate revolves nearby the current repo rate.
• The scheduled commercial banks, co-operative banks operate in this market as both the burrowers and lenders while LIC, GIC, Mutual Funds, IDBI and NABARD are allowed to operate as only lenders in this market.