Indian Economy

Money, Banking & Insurance

Meaning and Organs of Money Market

Money market refers to that mechanism whereby borrowers manage to obtain short term loanable funds on the one hand and lenders succeed in getting credit worthy borrowers for their money on the other. In this way any institution or person who is willing to provide short-period monetary debt becomes a part of the money market.

Under Indian money market, the Reserve Bank of India occupies the central position because it regulates and controls the credit supply of the country. Ordinarily, the Indian money market is divided into two parts

1. The organised sector.

2. The unorganised sector.

The organised sector includes the State Bank of India and its 7 associated banks, 19 nationalised banks, Regional Rural Banks, Co-operative Banks, Non-governmental sectors and other banks, whereas the unorganised sector includes the moneylenders and indigenous bankers.

Different Stages of the Development of Indian Banking

In order to make the Reserve Bank of India more powerful, the Indian Government nationalised it on January 1, 1949. With a view to have the co-ordinated regulation of Indian banking, the Indian Banking Act was passed in March 1949. According to this Act, the Reserve Bank of India was granted extended powers for the inspection of non-scheduled banks. For the development of the banking facilities in the rural areas the Imperial Bank of India was partially nationalised on 1 July, 1955 and it was named as the State Bank of India. Alongwith it other 8 (at present 7) banks were converted as its associate banks which form what is named as the State Bank Group. They are as follows :

1. The State Bank of Bikaner and Jaipur (In the beginning the State Bank of Bikaner and the State Bank of Jaipur were separate. But they were merged and named as the State Bank of Bikaner and Jaipur)

2. The State Bank of Hyderabad

3. The State Bank of Indore

4. The State Bank of Mysore

5. The State Bank of Saurashtra

6. The State Bank of Patiala

7. The State Bank of Travancore.

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