Short-term, highly liquid debt instruments, with maturities of up to one year, traded in the money market to meet the temporary funds needs of banks, companies and the government.
- Treasury Bills (T-bills) are short-term government borrowings issued at a discount and redeemed at face value, in 91-day, 182-day and 364-day tenors; they carry no separate interest coupon.
- Commercial Paper (CP) is an unsecured promissory note issued by creditworthy companies to raise short-term funds; Certificates of Deposit (CDs) are issued by banks against deposits.
- Call money (overnight) and notice money (up to 14 days) are very short interbank borrowings; the Collateralised Borrowing and Lending Obligation (CBLO) and tri-party repo serve similar needs.
- The money market is regulated by the RBI; it is distinct from the capital market, which deals in long-term funds and is regulated by SEBI.
- Money-market rates are influenced by the RBI's liquidity stance and the concept repo rate.
The T-bill tenors (91, 182, 364 days, issued at a discount), and identifying CP (companies) versus CDs (banks), are standard money-market facts.
Money market (short-term, up to one year, RBI-regulated) versus the capital market (long-term, SEBI-regulated); T-bills are government instruments, while CP is issued by companies and CDs by banks.
Short-term (up to one year) debt instruments: T-bills, commercial paper, certificates of deposit and call money; RBI-regulated.