4.31 Money Market:
Money Market is a place for short term lending and borrowing, typically within a year. It deals in short term debt financing and investments. On the other hand, Capital Market refers to stock market, which refers to trading in shares and bonds of companies on recognized stock exchanges. Individual players cannot invest in money market as the value of investments is large; on the other hand, in capital market, anybody can make investments through a broker. Stock Market is associated with high risk and high return while the Money Market is safe and secure. In money market, deals are transacted on phone or through electronic systems; in the capital market trading is done through recognized stock exchanges.
4.32 Government Securities:
The market for government securities is the oldest and most dominant in terms of market capitalization.
It not only provides resources to the government for meeting its short term and long term needs, but also sets benchmark for pricing corporate paper of varying maturities and is used by the RBI as an instrument of monetary policy. The instruments in this segment are fixed coupon bonds, commonly referred to as dated securities, treasury bills, floating rate bonds, zero coupon bonds. Both Central and State government securities comprise this segment of the debt market.
While the RBI regulates the issuance of government securities, corporate debt securities fall under the regulatory purview of the SEBI. NSE and BSE provide a trading platform for most debt instruments issued in India.