What is Call Money Rate ?
- 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.
tight liquidity condition leads to a rise in call money rate and vice versa.