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The Reform of the Indian Money Market, Indian Economy Video Lecture | Business Economics for CA Foundation

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FAQs on The Reform of the Indian Money Market, Indian Economy Video Lecture - Business Economics for CA Foundation

1. What is the Indian Money Market?
Ans. The Indian Money Market refers to the market where short-term funds are borrowed and lent by various participants such as banks, financial institutions, and individuals. It consists of various instruments like treasury bills, commercial papers, and call money market.
2. Why is the reform of the Indian Money Market important?
Ans. The reform of the Indian Money Market is important because it helps in improving the efficiency and effectiveness of the market. It aims to develop a well-functioning and stable money market that can meet the short-term funding requirements of the economy and contribute to its overall growth.
3. What are the key reforms introduced in the Indian Money Market?
Ans. Some of the key reforms introduced in the Indian Money Market include the establishment of the Discount and Finance House of India (DFHI), introduction of Commercial Papers (CPs) as a new instrument, development of the call money market, and the introduction of the Negotiated Dealing System (NDS) for trading in government securities.
4. How do these reforms benefit the Indian economy?
Ans. These reforms benefit the Indian economy in several ways. The establishment of DFHI helps in providing liquidity to the money market by buying and selling government securities. The introduction of CPs provides an additional source of short-term borrowing for companies. The development of the call money market facilitates smooth and efficient inter-bank lending. The NDS helps in improving the transparency and efficiency of trading in government securities.
5. How do the reforms in the Indian Money Market impact individuals and businesses?
Ans. The reforms in the Indian Money Market have a direct impact on individuals and businesses. Individuals can benefit from increased access to short-term borrowing options, such as personal loans and credit cards, which are influenced by the interest rates in the money market. Businesses can benefit from easier access to short-term funds for working capital requirements, which can help in improving their overall financial position and operations.
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