Economics · Class 12 Commerce
Ch 10Money Market and Capital Market in India — Class 12 Economics, concept-first.
The Indian financial system is the network of institutions, instruments, and markets through which the savings scattered across households, businesses, and the government are gathered together and channelled into productive investment. This chapter of the Maharashtra HSC (MSBSHSE) Std.
Key concepts
Hover a concept to preview it and jump to its most relevant Q&A.
Instruments of the Money Market
Key money-market instruments are Treasury Bills (safest, government-backed), Commercial Paper (unsecured corporate notes), Certificates of Deposit (bank-issued equivalent of CP), Call/Notice Money (interbank overnight-to…
Most relevant Q&A
- Which of the following money market instruments is issued by the RBI on behalf of the Government of India? (a) Commercial Paper (b) Certific…Free
- Explain the important instruments of the Indian money market.Free
- A 91-day Treasury Bill of face value ₹100 is issued at a discount price of ₹98. Calculate (i) the amount of discount, and (ii) the annualise…Preview
- Write a short note on Commercial Paper.Preview
- Identify and explain the following concept. Lucy deposited a Lump sum amount of ₹1,00,000/- in the Bonk of India for the period of one year.Preview
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
The Indian Financial System and the Meaning of the Money Market
The Indian financial system is the network of institutions, instruments, and markets through which the savings scattered across households, businesses, and the government are gathered together and cha…
Instruments of the Money Market
The Indian money market's organised sector trades a specific set of short-term instruments, each suited to a slightly different borrower and purpose.
Defects of the Indian Money Market and the Reforms Since the 1980s
Despite its size, the Indian money market — particularly before the reforms of the 1980s and 1990s — suffered from several structural weaknesses that limited how effectively it could serve the economy…
Capital Market — Meaning, Features and Structure
Meaning of the capital market. The capital market is the market for long-term funds — financial claims and instruments with a maturity period exceeding one year, or with no fixed maturity at all (as w…
Role of the Capital Market in Economic Development
A well-functioning capital market is not just a venue for buying and selling securities — it plays a direct, structural role in a country's economic development, in several distinct ways:
Distinguishing the Money Market from the Capital Market
Although both are components of the same Indian financial system, the money market and the capital market differ sharply on almost every dimension — maturity, instruments, participants, risk, and regu…
Regulatory Role of the RBI and SEBI
Both segments of India's financial market operate under dedicated regulators whose objectives — safety, liquidity, and investor confidence — are similar in spirit but applied to very different markets…
Sample & Board Papers
Sample papers and previous-year board questions for this subject.
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- Q1Assertion and reasoning question: Assertion (A): The money market economises the use of cash. Reasoning (R): The money market does not deal…Preview
- Q2Identify and explain the following concept. Lucy deposited a Lump sum amount of ₹1,00,000/- in the Bonk of India for the period of one year.Preview
- Q3State with reasons whether you agree or disagree with the following statement. The capital market plays an important role in India. (a) Agre…Preview
- Q4Study the following table, figure, and passage, and answer the questions given below it. | Commercial banks act as intermediaries in the cou…Preview
- Q5The money market faces a shortage of funds due to ______. (a) inadequate savings (b) growing demand for cash (c) presence of unorganized sec…Preview
- Q6Find the odd word out: Quantitative Tools of credit control: (a) Bank rate (b) Open market operations (c) Foreign Exchange rate (d) Variable…Preview
- Q7Assertion (A): Foreign exchange management and control is undertaken by commercial banks. Reasoning (R): RBI has to maintain the official ra…Preview
- Q8Identify and explain the following concept: Raju’s father invests his money in a market for long term funds both equity and debt raised with…Preview
- Q9Distinguish between: Demand deposit and Time depositPreview
- Q10Explain the problems faced by the money market in India.Preview
- Q11Factors which are working in unorganized money market. Money lenders Commercial bank Hundi Chit funds (a) a, b, c (b) b, c (c) b, d (d) a, c…Preview
- Q12Find the odd word out: Financial Assets: (a) Bonds (b) Land (c) Govt. Securities (d) DerivativesPreview
- Q13Give an economic term: Deposits that are withdrawable on demand.Preview
- Q14Identify and explain the following concept: Raju’s father invests his money in a market for long term funds both equity and debt raised with…Preview
- Q15Distinguish between: Recurring deposits and Fixed depositsPreview
- Q16Explain the problems of the capital market in India.Preview
- Q17Give an economic term: Deposits that are withdrawable on demand.Preview
- Q18Complete the correlation: ______ : Central bank :: SBI : Commercial BankPreview
- Q19Development financial institutions were established to ______. (a) provide short term funds. (b) develop industry, agriculture and other key…Preview
- Q20Explain the functions of a commercial bank.Preview
- Q21State with reasons whether you agree or disagree with the following statement. The capital market plays an important role in India. (a) Agre…Preview
- Q22Complete the correlation: Money market : Short-term funds : : ______ : Long-term funds.Preview
- Q23Identify and explain the concept from the given illustration: Tina deposited a lumpsum amount of ₹ 50,000 in the bank for a period of one ye…Preview
- Q24Explain the functions of RBI.Preview
More questions
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- Q4Describe the structure of the Indian money market.Free
- Q5Explain the important instruments of the Indian money market.Free
- Q8Explain the defects of the Indian money market and the reforms introduced to address them.Preview
- Q9Explain the meaning, features and structure of the capital market.Preview
- Q11Explain the role of the capital market in the economic development of India.Preview
- Q13Explain the role of the RBI and SEBI in regulating India's financial markets.Preview