Assertion: Call money is short term finance repayable on demand, with…

The correct answer is Option 3: Assertion (A) is true but Reasoning (R) is not correct.

Assertion: Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days. This is correct because call money is a highly liquid, short-term money market instrument.

Reasoning: Call money is used by reputed companies. This is false. Call money is primarily used for inter-bank transactions to manage daily liquidity and maintain the Cash Reserve Ratio (CRR).

"Call Money: Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions. Commercial banks have to maintain a minimum cash balance known as cash reserve ratio. The Reserve Bank of India changes the cash reserve ratio from time to time which in turn affects the amount of funds available to be given as loans by commercial banks. Call money is a method by which banks borrow from each other to be able to maintain the cash reserve ratio. The interest rate paid on call money loans is known as the call rate. It is a highly volatile rate that varies from day-to-day and sometimes even from hour-to-hour. "