A lesser level comparison of London, New York and Indian Money Market may be understood with the help of following table:

1. Period of Development

It has come into prominence only during the Second World War period.

2. Nature of Growth


Organized and well devel­oped but next to London Money Market.

3. Weapons used to Control Money Market

Bank rate and open market The Federal Banks use more CRR, ‘Repo’ transactions,

The acceptance houses, Dis­count Houses, etc. are play­ing main role in the money market. direct weapons of credit con­trols as variation of cash re­serve ratios, etc.


4. Specialized Institutions

It does not have such insti­tutions. Commercial banks perform these functions.

Moral suasion OMO of Trea­sury Bills, etc.

DFHI, Primary Dealers De­velopment Financial Institu­tions, Money Market Mutual Funds, etc.


5. Competition among Institutions

The functions of the specialized institutions like discount houses, acceptance houses, Bill brokers, Com­mercial banks, etc., are all complementary and these in­stitutions do not compete among themselves for funds.

In U.K. branch banking pre­vails. The banking system is mainly under the control of “Big five” Banks. All banks have their branches in London.

In England there is only Cen­tral Bank “The Bank of Eng­land” for the entire country.


In this market various insti­tutions function indepen­dently and hence compete for funds in the money mar­ket. But the competition is healthy.

6. System of Banking

In U.S.A. unit banking is pre­vailing, since there are nu­merous banks of small size, they do not have their banks in Washington.

7. Number of Central Banks


In U.S.A there are 12 “Fed­eral Reserve Banks” for dif­ferent regions. With Federal Reserve System at the apex level.

Healthy competition is gain­ing ground. RBI determines the players in the market- large number of lenders, in­cluding financial institu­tions, mutual funds, big corporate (through DFHI, etc.). However borrowers are restricted to commercial Banks and few institutions like DFHI primary dealers.

In India branch banking is popular. Even then many private sector banks are small in size.

In India there is only “RBI” for the entire central banking operations.


Recent Trends in Indian Banking

Commercial Banks extend financial assistance or the credit facilities in many ways. Although all Credit facilities are basically a loan, different methods of financing are adopted depending upon the period of finance, purpose of finance, quantum of balance, etc.

Some of these methods of financing introduced in the Indian banking in the recent period have been explained below. Similarly, the repayment of loan is also arranged in specific ways to suit customers/ borrowers requirements. Few such methods of repayment have also been explained in this chapter.

Indian Banking System developed enormously after independence. Particularly after nationalisation of banks there has been a multi-dimensional development.

Nationalisation of banks provided an impetus to the banking development and the banks started function­ing with social responsibility. The growth in various banking areas has been discussed in the latter part of this chapter.

First let us see the types of financing

1. Take out Financing

2. Revolving Credit Facilities

3. Ever greening of Loan

4. Syndicated Loan

5. Bridge Loan

6. Consortium Finance

7. Preferred Financing

8. Non-Fund Based Business

Types of Repayment System

1. Bullet Payment System

2. Balloon Payment System

Let us discuss these items one by one.