[This post elucidates what is a Government stock, who is all buyers of Government securities, why banks invest in Government securities beyond SLR requirement, advantages, and a brief on the issuance of Government Securities] What is G-sec? Government security (G-sec) is a form of security issued by the Government through a notification in the official…
Originally posted on September 8, 2017, updated on 24.11.2023 Money market mutual funds (MMMFs) are mutual funds that exclusively invest in short-term debt instruments, cash, and cash equivalents that are rated high quality. It is for this reason that money market mutual funds are considered safe investments with minimal to low risk. As these funds…
A negotiable certificate of deposit (NCD) is a certificate of deposit issued by the banks and it is freely negotiable unlike non-negotiable CDs which cannot be transferred, sold, bought, or exchanged. The Certificates of Deposit (CDs) were introduced in India in 1989.Minimum amount of a CD should be Rs.1 lakh. In India, CDs in physical…
The Negotiated Dealing System (NDS) is a facilitator platform for the purchase and sale of Government securities. The members who maintain their Subsidiary General Ledger (SGL) and or Current Account with RBI can participate in the auctions using this platform. Participants are primary dealers, commercial banks, and a few Financial Institutions who are permitted to…
Commercial Paper (CP) is an unsecured, money market instrument issued under section 45 W of the RBI Act. The corporates including Non-Banking Financial Companies and All India Financial Institutions (AIFIs) are eligible to issue Commercial Papers. Besides, other entities like co-operative societies/unions, government entities, trusts, limited liability partnerships, and other body corporates having a presence…
We are aware that Reserve Bank of India issues Government securities on behalf of the Government. Primary Dealers are the licensed dealers who deal in buying and selling these Government securities. There are two types of primary dealers, viz. Standalone Primary Dealers and Bank Primary Dealers. Standalone Primary Dealers: Most of these PDs are subsidiaries…
The equity market represents the trading of equities known as stock market or share market. Debt market is basically a market where fixed income instruments/securities traded. The debt instruments are issued by the central and state governments, Municipal corporations, Banks, financial institutions and corporate. The nature of equity and debt instruments are vastly different with…
Debt market is basically a market where fixed income instruments/securities issued by the central and state governments, Municipal corporations are traded. The fixed reimbursement securities may also be issued by commercial banks, financial institutions as well as corporate bodies. Regulators: The Government securities and bonds issued by banks and financial institutions are regulated by RBI.…
Every commercial bank in India borrow funds from other banks to cover a sudden shortfall in cash on a particular day in the following circumstances. to tide down the temporary requirements of funds due to liquid asset-liability mismatch to meet the mandatory requirement of CRR&SLR or to meet the demand for funds arising out of…
The money market instrument is a marketplace for trading in short-term debt investments considered low-risk investments with high safety. It is primarily used by governments and corporations to keep their cash flow steady, and for investors to make a modest profit. The money market ensures a balance between the demand for short-term funds and their…