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CA Foundation · Business Economics · Money Market

Which of the following participants is typically EXCLUDED from participating directly in the call money market?

The call money market is reserved for scheduled commercial banks, non-scheduled banks, primary dealers, and certain authorized NBFCs. State cooperative banks are typically excluded as participants because the RBI restricts direct participation to maintain market discipline and operational efficiency.

  1. AScheduled commercial banks
  2. BNon-banking finance companies (NBFCs)Correct
  3. CPrimary dealers registered with the RBI
  4. DState cooperative banks

Explanation

The call money market is an inter-bank market for very short-term borrowing and lending, primarily between scheduled commercial banks, non-scheduled banks, and certain authorized institutions like primary dealers and select NBFCs. State cooperative banks, while important financial institutions, are not participants in the RBI-regulated call money market; they operate in different segments. The RBI strictly regulates participation to maintain market integrity. Option 1 is the most accurate distractor as it appears institutional but lacks direct RBI authorization for call money participation in this specific context.

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