Money Markets and Capital Markets

Money Market:

The money market which deals in short-term credit and other assets generally up to one year duration. The money market has organized and unorganized segments. The organized segment dominated by the banking sector and the NBFIs. The unorganized segment consists of indigenous bankers and money-lenders. While TBs, Call Money, CPs, CBs and CDs are major financial instruments of the organized money market, Hundis are the financial instrument of the unorganized money market.

Capital Market:

The capital market which deals with medium to long-term assets traded in the primary and the secondary markets. The primary market deals with the issue of new shares and other investment instruments by the corporate sector such as equity, preference shares and debentures, as well as the issue of bonds and shares by public sector consisting of Central and State Governments, various public sector industrial units (PSUs), statutory and other authorities such as electricity boards and port trusts, non-government companies, banks and other financial institutions.

The secondary market is made up to 23 stock exchanges including National Stock Exchange (NSE), OTCEI, ISEIL, with membership from stock brokers, mutual funds, financial institutions, foreign institutional investors (FIIs) and individual investors. The participants in the primary market on the other hand are the merchant bankers, mutual funds, financial institutions, FIIs and individual investors. The entire operations of these markets are under the overall regulation of the SEBI.