Download - Fixed income instruments
CALL MONEY
NOTICE MONEY
TREASURY BILLS
REPOS
COMMERCIAL PAPER
CERTIFICATE OF DEPOSITS
Call money market is an inter-bank market
Day to day surplus funds are either borrowed by or lent to banks
Maturity of loans is 1 day to 14 days
Repayable on demand at the option of either lender or borrower, i.e. on call
Notice Money – Money lent for a period exceeding I day
Liquidity is very high
Commonly referred to as T-Bills
Represent obligations of the GOI
Tenor: 14-days, 90-days, 182-days, 364-days
Do not carry an explicit coupon rate
Sold at a discount and redeemed at par
Have no credit risk
Have negligible price risk
Banks and Primary Dealers (PDs) are main holders – as part of their SLR requirements
A 1) Requires short term funds2) Does the Repo3) Sells securities4) Simultaneously agrees to repurchase the securities at a later date at a slightly higher price.5) Difference between sale price and repurchase price represents interest cost to A
B 1) Wants to make a short investment2) Does the Reverse Repo3)Buys securities4)Difference between sale price and repurchase price represents interest income to B
FUNDS
SECURITY
Unsecured short-term instrument
Issued by large corporates
Sold at a discount and redeemed at par
Interest rate will depend on overall short-term money market rates and credit standing of the issuer
Individual investors can invest in CPs.
Banks cannot accept CPs
Usually has a maturity period of 90 – 180 days
Short-term, transferable instrument
Issued by banks and financial institutions
Generally risk-free
CDs carry an interest rate
Banks, financial institutions, corporates and MFs are primary investors in CPs.
Usually has a maturity period of 3 months to 1 year
GILT EDGED SECURITIES (G-Secs)
PSU BONDS
CORPORATE BONDS/DEBENTURES