Consider the following:
(A) Non-Banking Finance Companies
(B) State Governments
(C) Depository participants
(D) Large corporate houses
(E) Stock exchanges
How many of the above are among the major participants in the money market?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Three
(A) Non-Banking Finance Companies — A participant. Non-banking finance companies are among the major participants in the money market.
(B) State Governments — A participant. State Governments take part in the money market.
(C) Depository participants — Not a participant. A depository participant links an investor with a depository and keeps the demat account. It works in the share market.
(D) Large corporate houses — A participant. Large corporate houses are major participants in the money market.
(E) Stock exchanges — Not a participant. A stock exchange is the platform for buying and selling existing securities. It is the secondary market of the capital market.
NCERT (Pre-rationalised Edition): “MONEY MARKET The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. These assets are close substitutes for money. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. It has no physical location, but is an activity conducted over the telephone and through the internet. It enables the raising of short-term funds for meeting the temporary shortages of cash and obligations and the temporary deployment of excess funds for earning returns. The major participants in the market are the Reserve Bank of India (RBI), Commercial Banks, Non-Banking Finance Companies, State Governments, Large Corporate Houses and Mutual Funds.” |