Meaning: - A market where short term funds are borrowed
and lent is called 'money market'. It is a market for financial assets that are
close substitutes for money. The instruments dealt with in the market are
liquid and can be converted quickly into cash at low transaction cost.
Definition: - According to the Reserve Bank of India
"A money market is the centre for dealing, mainly of short term characters
in money assets, it needs the short term requirements of borrowers and provide
liquidity or cash to the lenders. It is a place where short term surplus
investible funds at the disposal of financial institution or individuals are
bid by borrower's agents comprising institutions and individuals and also the
government itself.
Characteristics
of Money Market:
1.
Short
term funds are borrowed and lent.
2.
No
fixed place for carrying out operations.
3.
Dealings
may conduct with or without brokers.
4.
The
financial assets which are dealt in are close substitute for money i.e. the
assets can be converted into cash with ease, speed and without any loss.
5.
The
maximum period for which the funds are traded in the market is one year.
6.
It
is not a single market but a collection of markets for different instruments.
7.
The
main organizations in the market are RBI, State governments, banks, corporate
investors, etc.
