Current position of money market in Madhya Pradesh. - MAINS QUESTION - DAILY CURRENT AFFAIR QUESTIONS AND ANSWERS

Friday, August 28, 2020

Current position of money market in Madhya Pradesh.

Money Market in Madhya Pradesh

What is Money Market?

The money market is a place where short term tenure obligations such as treasury bills, commercial paper / paper and bankers' approvals etc. are bought and sold. In finance, the currency market refers to the global financial market for borrowing and lending short-term debt. It provides short term cash / liquidity funding for the global financial system. 

The money market consists of financial institutions and money or credit dealers, who either undertake borrowing or lending. Participants borrow or lend for a short period, usually up to thirteen months. Money market trading of short-term financial instruments is commonly called "paper". This is in contrast to the relatively long-term capital capital market, which is supplied by bonds and shares.

There are banks in the money market and origin, which borrow and lend to each other using commercial paper, repurchase agreements and similar instruments. In fact, the money market is a center where monetary assets or securities of short-term nature (generally less than 1 year duration) are dealt.

Instruments which are used in Money Market

The main instruments which are used in the money market  are federal funds, treasury bills, bankers acceptance, commercial paper, deposits, bills of exchange, short lived mortgage and asset backed securities, certificates of deposits etc.

Functions of Money Market 

The Reserve Bank controls the amount of liquidity in the economy through the money market.
Money market plays an important role in domestic and foreign trading.
Money market helps the  industries to grow.
Money market helps the commercial banks to invest their extra reserve without affecting the market liquidity.
Developed money market of any country helps the central bank to become self sufficient.

Types of Money Market 

 Money market is divided into two parts -

(1) Organized Money Market - Under this, Flat money, the Reserve Bank, Commercial Bank, Cooperative Bank and Regional Rural Bank are the main ones.

(2) Unorganized Money Market - Under this comes the native bankers like money lender Mahajan etc.

Money Market in Madhya Pradesh

The number of bank branches in the country is about 5641 and this number is continuously increasing. Out of these bank branches, the branches of commercial banks in cities are about 1311 cooperative banks and 72 branches of Regional Rural Banks. The remaining branches are in rural and semi-urban areas.
There is a network of self-help groups in the state. E.g. Sanchi Dairy Association.

If we talk about the state of madhya pradesh, the money market not fully grown yet. It is still developing.

Also read about the 

the importance of agriculture in the economy of Madhya Pradesh.

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