Money Market
Money Market Financial Market Money Market / Financial market is the market that facilitates the transfer of funds between investors/ lenders and borrowers/ users. The financial market may be defined as ‘a transmission mechanism between investors (or lenders) and the borrowers (or users) through which transfer of funds is facilitated’. It consists of individual investors, financial institutions, and other intermediaries who are linked by a formal trading rule and communication network for trading the various financial assets and credit instruments. It deals in financial instruments (like bills of exchange, shares, debentures, bonds, etc). Classification of financial markets Money market / Markets for short term funds: Financial instruments traded in them mature in less than a year Capital markets / Markets for long term funds: Financial instruments traded in them mature in more than a year. Instruments of Money market Or Sub Markets of Money market Cash Management Bills (CMBs) — These are short term bills issued by central government to meet its immediate cash needs. The bills are issued by the RBI on behalf of the government. Hence the CMBs are short-term money market instruments that help the government to meet its temporary cash flow mismatches. Following are the features of CMBs. CMBs have a maturity of less than 91 days. The CMBs have the generic character of Treasury Bills as the CMBs are issued at a discount and redeemed at face value at maturity. For example, if the face value of a CMB is Rs 100, we can get the bill at Rs 97 and at the end of the maturity date, say 60 after days, we can get Rs 100. Here, there is no interest payment as the maturity period is so small. But the return for buying CMB is obtained in the form of a discount. The tenure or maturity, notified amount (how much total CMBs to be issued) and date of issue of the CMBs depends upon the temporary cash requirement of the Government. CMBs are eligible as SLR securities. Investment in CMBs is also recognized as an eligible investment in Government securities by banks for SLR purpose under Section 24 of the Banking Regulation Act, 1949. CMBs are issued first on May 12, 2010. The purpose of the mechanism is to enable the government to get short term money. Ways and Means Advances (WMA). Under WMA, the RBI gives temporary loan facilities to the centre and state governments as a banker to government for upto 90 days. Call money market (CMM) — The market where overnight (one day) loans can be availed by banks to meet liquidity. Banks who seeks to avail liquidity approaches the call market as borrowers and the ones who have excess liquidity participate there as lenders. The CMM is functional from Monday to Friday. Banks can access CMM to meet their reserve requirements (CRR and SLR) or to cover a sudden shortfall in cash on any particular day. Effectively, the Call Money Market is the main market oriented mechanism to meet the liquidity requirements of banks. Notice money market The call money is usually availed for one day. If the bank needs funds for more days, it can avail money through notice market. Here, the loan is provided from two days to fourteen days. Participants Participants in the call money market are Scheduled commercial banks (excluding RRBs), co-operative banks (other than Land Development Banks) and Primary Dealers (PDs) [ i.e A primary dealer is a bank or other financial institution that has been approved to trade securities with a national government ] are permitted to participate in call/ notice money market both as borrowers and lenders. As per the new regulations, Payment Banks are also allowed to participate in CMM as both lenders and borrowers. Banks are the dominant participants in the CMM and hence it is often known as interbank call money market. Surplus banks will give loans to other banks. Deficit banks that need funds will purchase it. * Functioning of the Call Money Market Loans are availed through auction/negotiation. The auction is made on interest rate. Highest bidder (who is ready to give higher interest rate) can avail the loan. Average interest rate in the call market is called call rate. This call money rate is an important variable for the RBI to assess the liquidity situation in the economy. The CMM is known as the most sensitive segment of the financial system. Treasury Bill ( TB ) — When the government is going to the financial market to raise money, it can do it by issuing two types of debt instruments – treasury bills and government bonds. Treasury bills are issued when the government need money for a shorter period while bonds are issued when it need debt for more than say five years. Treasury bills; generally shortened as T-bills, have a maximum maturity of a 364 days. Hence, they are categorized as money market instruments (money market deals with funds with a maturity of less than one year). Treasury bills are presently issued in three maturities, namely, 91 days, 182 days, and 364 days. Treasury bills pay no interest Moreover, treasury bills are zero-coupon securities and pay no interest. Rather, they are issued at a discount (at a reduced amount) and redeemed (given back money) at the face value at maturity. For example, a 91 day Treasury bill of Rs.100/- (face value) may be issued at say Rs. 98.20, that is, at a discount of say, Rs.1.80 and would be redeemed at the face value of Rs.100/-. This means that you can get a hundred-rupee treasury bill at a lower price and can get Rupees hundred at maturity. The return to the investors is the difference between the maturity value or the face value (that is Rs.100) and the issue price. The Reserve Bank of India conducts auctions usually every Wednesday to issue T-bills. The rational is that since their maturity is lower, it is more convenient to avoid intra period interest payments. Treasury bills
Current situation of COVID 19
Current situation of COVID 19 It’s been a privilege to introduce a write up from one of the best Govt. Exam Coaching Institute, MIES Group. An informative article on the current situation of COVID 19 is been written by on the top faculty of this best Govt. Service Exam Coaching Center. Ms. Mahejabin Khatun, she had brilliantly described in this article about the current situation of COVID 19. In such a way that it will enhance and aware more to mankind. MIES Group is one of the Top Competitive Exam Preparation Institute of West Bengal, Head Office at Sonarpur, South Kolkata. And Main city Center at Sealdah and other places of West Bengal. MIES, One of the Top Competitive Institute in West Bengal has provided the best teaching in Competitive Exam. And moreover, organize the best Test series for Govt. Service Exams. The entire world is going through a pandemic which had never happened or even thought of before. With the outbreak of the pandemic causing the Corona Virus a lot of chaos can be witnessed globally. Moreover, the deadly virus that originated in China spread to the world with the blink of an eye and did global destruction. Since the death toll is rising at an alarming rate. And besides that, the panic amongst the general public is increasing. Also to make it very difficult for the government around the world to handle. It is well known that since we don’t have any vaccine to cure COVID-19. So, we can only practice precautions as advised by the World Health Organization (WHO) to stay away from the virus. Moreover, self-isolation, being quarantined, maintaining social distancing are important. And moreover, practicing personal hygiene is the only way as of now to prevent the spread of the virus. Indian Govt. vs CORONA VIRUS We have already witnessed how COVID-19 has made the government of the most developed nation, helpless. It is high time we Indians realize that with a population of over 1.3 billion. Illiteracy, poor hygiene practiced by many, scarcity of medical help. And moreover, most importantly adamant nature of some Indians. Therefore, if we don’t follow the guidelines of WHO rigorously the condition of India can be worse than that of Italy. So this is the more or less the current situation of COVID 19 in India. When the cases started rising in India as well. The Indian government tried its first card to combat the virus by announcing a one-day Janata Curfew on22nd March 2020 which was strictly adhered to quite an extend. Following the Janata Curfew, the Central Government announced a 21-day lockdown in the entire nation with an effort to fight against the Corona Virus. But people started taking the lockdown very lightly, they, were not staying quarantined. Moreover, there were long lines outside the shops because people started panic buying. While there were a few who took the lockdown period as a vacation or a holiday to party. Govt. Competitive Exam canceled going through a Pandemic: It is seen some people don’t value their lives, their family’s lives, keep aside the nation and roam around freely. There is an urgent need to educate the Indians of the seriousness of the situation, and the best way is to make them aware of the laws related to COVID-19 and let them know the consequences they can face for breaking the rules of the lockdown. Here are a few laws related to the current situation of COVID-19 that should be known to all citizens of India. a) Section 271 of the Indian Penal Code, 1860: “Disobedience to quarantine rule. This section clearly says that whosoever disobeys the quarantine rule shall be punished with imprisonment or fine or both. b) Section 269 of the Indian Penal Code, 1860: “Negligent act likely to spread infection of disease dangerous to life. This section applies to those who negligently act to spread the virus. They shall be penalized with imprisonment or fine or both. c) Section 270 of the Indian Penal Code, 1860: “Malignant act likely to spread infection of disease dangerous to life. This law is for those who know the consequence of their actions could lead to the spread of the virus and still choose to do such an act shall be penalized. d) The Epidemic Disease Act, 1897: Power to take special measures and prescribe regulations as a too dangerous epidemic disease. When at any time the [State Government] is satisfied that [the State] or any part thereof is visited by, or threatened with, an outbreak of any dangerous epidemic disease, the [State Government], if [it] thinks that the ordinary provisions of the law for the time being in force are insufficient for the purpose, may take, or require or empower any person to take, such measures and, by public notice, prescribe such temporary regulations to be observed by the public or by any person or class of persons as [it] shall deem necessary to prevent the outbreak of such disease or the spread thereof, and may determine in what manner and by whom any expenses incurred (including compensation if any) shall be defrayed. In particular and without prejudice to the generality of the foregoing provisions, the [State Government] may take measures and prescribe regulations for. The inspection of persons traveling by railway or otherwise, and the segregation, in hospital, temporary accommodation or otherwise, of persons suspected by the inspecting officer of being infected with any such disease. Powers of Central Government: When the Central Government is satisfied that India or any part thereof is visited by, or threatened with, an outbreak of any dangerous epidemic disease and that the ordinary provisions of the law for the time being in force are insufficient to prevent the outbreak of such disease or the spread thereof, the Central Government may take measures and prescribe regulations for the inspection of any ship or vessel leaving or arriving at any port in 2 [the territories to which this Act extends] and for such detention thereof,