Ayussh Sanghi is teaching live on Unacademy Plus
Money Market By Ayussh Sanghi Part 5
Certificate of Deposits (CDs) CDs are negotiable instruments'. Ds are 'negotiable instruments. .C Issued in dematerialised form or as a Usance Promissory Note, It is given against funds deposited at a bank or other eligible financial institution for a specified time period. . Issued by financial institutions and commercial banks (excluding RRBs and Local Area banks).
Maturity period of CDs Banks 3 months -1 year Financial institutions- Between 1 - 3 years -I year Minimum amount of a CD should be Rs.1 lakh, i.e., the minimum deposit that could be accepted from a single subscriber should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh thereafter."
. There is no lock-in period for CDs S. Financial institutions and banks cannot grant loans against CDs All OTC trades in CDs shall be reported within 15 minutes of the trade on the FIMMDA reporting platform." CDs in physical form can be easily transferred through endorsement Stamp duty is applicable on CD's Yield is slightly higher than T-Bills.
For example: One can easily purchase a CD for Rs. 100000, for a time period of one-year, where it pays 5% semi-annually. After six months, an interest of Rs. 2500 (Rs.1 ,00000 x 5 % x 0.5 years) can be earned." earned,"
Repurchase agreements (Repos) Repurchase agreements or Repos were introduced by the government to manage excess liquidity in the market'. . It is an important money market instrument used by the Central bank and other banks to manage short term liquidity. It enables "collateralised short term borrowing and lending through sale or purchase operations in debt instruments Repurchase transactions take place between the entities approved by RBI Repos are extremely low risk short-term instruments.
FBIL- Overnight MIBOR (Mumbai Inter-Bank Offer Rate) MIBOR is the benchmark rate at which banks lend and borrow overnight money to each other FBIL-Overnight MIBOR was introduced on July 22, 2015 FBIL-Overnight MIBOR "the new benchmark rate for unsecured loans of one day duration fixed by the Board of Financial Benchmarks India Pvt. Ltd (FBIL) based on the actual transactions in the inter-bank call money market. . FBIL-Overnight MIBOR . Earlier, it was published by NSE. . MIBOR is fixed for overnight to 3 month long funds' MIBOR rates are published at a designated time every day. MIBOR rates are published at a designated time