The money market refers to the market where borrowers and lenders exchange short-term funds to solve their
liquidity needs. It is a market for short-term financial assets that are close substitutes of money. It is a very important segment of a financial system. Short term funds upto one year are dealt in Money Market. Money Market instruments can be quickly converted into money. Money Market has two main segments. They are:-
1. Organized Segment:- It consists RBI, SBI and its associate banks, RRBS, Public Sector Banks, Private Sector Commercial Banks, LIC, Foreign Banks etc.
2. Un-Organized Segments:- It consists Indigenous banks, Money Lenders, Chit Funds etc.
Money Market Instruments:-
The following are the Money Market Instruments:
1. Treasury Bills
2. Certificate of Deposits
3. Commercial Paper
The most important feature of a money market instrument is that it is liquid and can be turned into money.