What is Call Money Rate ?

Definition: 

  • Call money rate is the rate at which short term funds are borrowed and lent in the money market. 
  • The duration of the call money loan is 1 day. 
  • Banks resort to these type of loans to fill the asset liability mismatch, comply with the statutory CRR and SLR requirements and to meet the sudden demand of funds. 
  • RBI, banks, primary dealers etc are the participants of the call money market. 
  • Demand and supply of liquidity affect the call money rate. 
  • A tight liquidity condition leads to a rise in call money rate and vice versa.