The Money Market:- The money market is a group firms engaged in lending and borrowing money on a short term basis. Short-term means three years or less, but the bulk of the money market transactions take place in maturities of one year or less. The market is not a primarily organised meeting place where buyers and sellers meet. Rather it is a group of buying and selling institutions, and middlemen all over the country who are in communication by telephone, wire, mail and who transact their operations through these media.

The basic type of paper traded in are treasury bills. These are the main instruments by which governments borrow short-term funds and investors who buy treasury bills at the time of issue lending money to government, Besides treasury bills promissory notes, bills of exchange and negotiable time certificates of deposits are also traded in.

The banks constitute the key group of lenders. The other members of the money market include acceptance house, hire purchase firms, insurance companies, brokers, investment dealers and businessmen.