Define: Call Money

Call money refers to short-term funds borrowed or lent in the interbank market for a period of one day. It is typically used by banks and financial institutions to meet their immediate funding requirements.

Yes, call money is a legally recognized financial instrument in many jurisdictions. It is governed by the regulations and guidelines set forth by the respective central banks or regulatory authorities.

Banks, financial institutions, and other eligible entities with the necessary regulatory approvals can participate in the call money market. Individual investors or retail customers generally do not have direct access to this market.

The interest rate on call money transactions is determined by market forces and can vary depending on factors such as prevailing market conditions, liquidity, and creditworthiness of the participants. It is typically higher than the rates offered on longer-term borrowing or lending instruments.

There may be certain restrictions on the usage of call money funds, depending on the jurisdiction and the specific terms agreed upon between the parties involved. These restrictions are usually aimed at ensuring the stability and integrity of the financial system.

Failure to repay call money on the agreed date may result in penalties, legal action, or damage to the borrower’s reputation. It is essential for borrowers to honor their obligations to maintain trust and credibility in the market.

Yes, the call money market is subject to regulations and guidelines set by the respective central banks or regulatory authorities. These regulations aim to ensure transparency, fairness, and stability in the market.

In some cases, call money can be used as collateral for other transactions, subject to the agreement between the parties involved and the applicable regulations. However, the availability and acceptability of call money as collateral may vary depending on the specific circumstances.

Call money is typically borrowed or lent for a very short duration, usually one day, whereas other short-term instruments like commercial paper or certificates of deposit may have longer tenures. Additionally, call money transactions are usually unsecured, whereas other instruments may involve collateral or guarantees.