Consider the following statements about Call Money in India:
1. It does not involve regular principal and interest repayments instead, the interest is charged based on the prevailing call loan rate.
2. Brokerage firms use call money primarily for short-term transactions that are settled quickly.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question

Consider the following statements about Call Money in India:
1. It does not involve regular principal and interest repayments instead, the interest is charged based on the prevailing call loan rate.
2. Brokerage firms use call money primarily for short-term transactions that are settled quickly.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

ONLiNE UPSC · Accepted Answer

Statement 1 is correct: Call money is a short-term loan (usually for a day) that does not involve regular EMI-like payments. The interest charged is known as the call rate, which varies daily based on market liquidity.

Statement 2 is correct: Brokerage firms and other financial intermediaries often use call money for short-term liquidity needs, especially to settle trading obligations quickly.

Money Market in India

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M Question 1	⏱ 0
Consider the following statements about Call Money in India: 1. It does not involve regular principal and interest repayments instead, the interest is charged based on the prevailing call loan rate. 2. Brokerage firms use call money primarily for short-term transactions that are settled quickly. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2