Q.Justify the following statement.
There are many participants in money market.

Yes — the money market has many participants because it serves the short-term borrowing and lending needs of a wide range of institutions, from the central bank to companies.

The statement 'There are many participants in money market' is justified because the money market deals in short-term funds (up to one year), and a large variety of institutions take part in it as lenders, borrowers or intermediaries. The main participants are:

1. Reserve Bank of India (RBI) — The apex institution that regulates and controls the money market and influences the supply of short-term funds through its monetary policy.
2. Commercial banks — Both lend surplus funds and borrow to meet short-term liquidity needs; they are the most active participants.
3. Cooperative banks — Participate in the money market for meeting their short-term fund requirements.
4. Non-Banking Financial Companies (NBFCs) — Deal in short-term instruments to manage their funds.
5. Discount and Finance House of India (DFHI) — Established to develop the money market and provide liquidity to instruments like treasury bills and commercial bills.
6. Mutual funds — Invest short-term surplus in money market instruments and offer money market mutual fund schemes.
7. Large companies and corporate houses — Raise short-term finance by issuing instruments like commercial paper and invest surplus cash in the market.
8. Government — Raises short-term funds by issuing treasury bills. …