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Call Money Rate

In: Business and Management

Submitted By moseab
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Call money market is a short-term money market, which allows for large financial institutions, such as banks, mutual funds and corporations to borrow and lend money at interbank rates. The loans in the call money market are very short, usually lasting no longer than a week and are often used to help banks meet reserve requirements. The call/notice money market forms an important segment of the Indian Money Market. Under call money market, funds are transacted on an overnight basis and under notice money market, funds are transacted for a period between 2 days and 14 days. Participants in call/notice money market currently include scheduled commercial banks (excluding RRBs), co-operative banks (other than Land Development Banks) and Primary Dealers (PDs), both as borrowers and lenders .The call money market is influenced by liquidity conditions, mainly governed by deposit mobilization, capital flows and the reserve bank’s operations affecting banks’ reserve requirements on the supply side and tax outflows, government borrowing programme, non-food credit off-take and seasonal fluctuations such as large currency drawals during the festive season on the demand side. During the times of easy liquidity, call rates tend to hover around the bank’s repo rate which provides a avenue for parking short term surplus funds and during periods of tight liquidity, call rates tend to move up towards the bank’s reverse repo rate.


The information content of the Islamic interbank money market rate in Malaysia

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