ndian inan ial     ar et      11.3
     and are needed to meet shortfalls in working capital         1. unorgAniseD money mArket
     requirements. This requires creation of a different
                                                                  Before the government started the organised
     segment of the financial market which can cater to
                                                                  development of the money market in India,
     the short-term requirements of such funds for the
                                                                  its unorganised form had its presence since the
     eneterprises—known as the money market or the
                                                                  ancient times—its remnant is still present in the
     working capital market. The short-term period is
                                                                  country. Their activities are not regulated like the
     defined as upto 364 days.
                                                                  organised money market, but they are recognised
     The crucial role money market plays in an economy
                                                                  by the government. In recent years, some of them
     is proved by the fact that if only a few lakhs or
                                                                  have been included under the regulated organised
     crores of rupees of working capital is not met in
                                                                  market (for example, the NBFCs were put under
     time, it can push a firm or business enterprise
                                                                  the regulatory control of the RBI in 1997). The
     to go for lock-out, which has been set-up with
                                                                  unorganised money market in India may be
     thousands of crores of capital. If lock-out happens,
                                                                  divided into three differing categories:
     the firm might default in its payments, losing its
     age-old credit-worthiness, consequently creating a                (i) Unregulated Non-Bank Financial
     chain of negatives in the economic system. This is                    Intermediaries: Unregulated Non-
     why it is essential for every economy to organise a                   Banking Financial Intermediaries are
     strong and vibrant money market which has wider                       functioning in the form of chit funds,
     geographic presence (the reason why it is today                       nidhis (operate in South India, which
     internet-based).                                                      lend to only their members) and loan
                                                                           companies. They charge very high interest
     Money Market in India: The organised form                             rates (i.e., 36 to 48 per cent per annum),
     of money market in India is just close to three                       thus, are exploitative in nature and have
     decades old. However, its presence has been there,                    selective reach in the economy.
     but restricted to the government only.6 It was the
                                                                      (ii) Indigenous         Bankers:      Indigenous
     Chakravarthy Committee (1985) which, for the
                                                                           bankers receive deposits and lend money
     first time, underlined the need of an organised
                                                                           in the capacity of an individual or a
     money market in the country7 and the Vahul
                                                                           private firms. There are, basically, four
     Committee (1987) laid the blue print for its
                                                                           such bankers in the country functioning
     development.8 Today, money market in India is
                                                                           as non-homogenous groups:
     not an integrated unit and has two segments—
     Unorganised Money Market and Organised Money                          (a) Gujarati Shroffs: They operate in
     Market.                                                                   Mumbai, Kolkata as well as in
                                                                               industrial, trading and port cities in
         6.  The only instrument of the money market was the                   the region.
               reasury ills, which were sold y tender at wee ly
             auctions upto       . ut later these ills were made           (b) Multani or Shikarpuri Shroffs: They
             availa le throughout the wee at discount rates y the              operate in Mumbai, Kolkata, Assam
             Reserve Bank of India.                                            tea gardens and North Eastern India.
         7.  Sukhomoy Chakravarthy, Review of the Working of
             the Monetary System (New Delhi: Reserve Bank of               (c) Marwari Kayas: They operate mainly
             India, 1985).                                                     in Gujarat with a little bit of presence
         8.  M. Vaghul, Working Group on Money Market (New                     in Mumbai and Kolkata.
             Delhi: Reserve Bank of India, 1987). The committee
             was set up in    , and came to e nown as the aghul            (d) Chettiars: They are active in Chennai
             Committee.                                                        and at the ports of southern India.