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COMMERCIAL BILL MARKET

COMMERCIAL BILL MARKET. The financial instrument which is traded in the bill market is called a bill of exchange. It is used for financing a transaction in goods that takes some time to complete .

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COMMERCIAL BILL MARKET

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  1. COMMERCIAL BILL MARKET

  2. The financial instrument which is traded in the bill market is called a bill of exchange. It is used for financing a transaction in goods that takes some time to complete.

  3. It is like a postdated cheques drawn by sellers of goods on the buyers of goods for valued received. • It is an important device for providing short term finance to trade and Industry.

  4. Classification They can be classified on the basis of: • When they are due for payment. • Whether documents to title of goods accompany them or not. • The type of activity they finance.

  5. Purpose • CBs are used for financing the movement and storage of goods between countries before exports and also within country. • In India, it is used mainly for financing agricultural operations, SSIs etcs.

  6. Factors behind underdevelopment • RBI Initiative to develop bill market.

  7. GOVERNMENT SECURITIES MARKET • Unlike other instruments, it is held by the Central Bank of a country and is closely linked with the instruments of monetary control such as OMO and SLR. • Since RBI can issue currency notes against it they are the ultimate source of liquidity in the economy.

  8. The GSM is mainly denominated in Rs.100 or Rs.1,000.the rate of interest is relatively lower because of their being liquid and safe. • FIs are required to invest a certain portion of their investible funds in GSM. This leads to an expansion of GSM every year.

  9. Interest in GSM is payable half yearly. • Individuals do not normally invest in GSM. • There are three forms of GSM- • Stock Certificate • Bearer Bond • Promissory note

  10. Recent Development in GSM

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