Participants in the Money Market

A range of institutions participate in the money market, each playing a distinct role:

• The Reserve Bank of India (RBI) — the apex regulator and the most influential single participant, both making the rules that govern the money market and actively operating within it (through repo/reverse repo operations, and by managing the Government's own short-term borrowing via Treasury Bills).
• Commercial banks — the largest group of participants, both as lenders and borrowers of short-term funds. Banks lend to and borrow from each other in the call money market to manage their day-to-day cash reserve requirements, and they also invest surplus funds in other money-market instruments.
• Financial institutions — such as development banks and other specialised institutions, which participate as both lenders and investors of short-term surplus funds.
• Corporates (companies) — large, creditworthy companies raise short-term working-capital funds by issuing commercial paper directly to investors, often at a lower cost than a bank loan; companies with temporary surplus cash also invest in money-market instruments.
• Mutual funds — particularly liquid/money-market mutual fund schemes, which pool investors' money and invest it in a diversified basket of money-market instruments, giving even small investors indirect access to a market that otherwise deals mainly in large denominations. …