Participants in the call money market are scheduled commercial banks, non-scheduled commercial banks, foreign banks, state, district and urban, cooperative banks, Discount and Finance House of India (DFHI) and Securities Trading Corporation of India (STCI). The DFHI and STCI borrow as well as lend, like banks and primary dealers, in the call market. At one time, only a few large banks, particularly foreign banks, operated in the call money market.
Over time, however, the market has expanded and now small banks and non-scheduled banks also participate in this market. Earlier foreign banks were primarily lenders on this market.
However, now their participation as borrowers has increased for meeting CRR requirements.
Difficulties in tapping deposits through branch expansion, and an increase in the cost of servicing (FCNR) deposits have also compelled foreign banks to borrow in the call money market, converting them from net lenders to net borrowers.
Among the large commercial banks, the SBI kept away from the call market till 1970 after which it has been regularly participating in this market. Because of its large size and formidable cash position, its participation made the market more active. The SBI group is a major lender but a small borrower in the call market.
Over time, however, the market has expanded and now small banks and non-scheduled banks also participate in this market. Earlier foreign banks were primarily lenders on this market.
However, now their participation as borrowers has increased for meeting CRR requirements.
Difficulties in tapping deposits through branch expansion, and an increase in the cost of servicing (FCNR) deposits have also compelled foreign banks to borrow in the call money market, converting them from net lenders to net borrowers.
Among the large commercial banks, the SBI kept away from the call market till 1970 after which it has been regularly participating in this market. Because of its large size and formidable cash position, its participation made the market more active. The SBI group is a major lender but a small borrower in the call market.