Money at Call and Short Notice :
Money at call and short notice represents short-term investment of surplus funds in the money market. Money lent for one day is money at ‘call’ or ‘call money’ means deals in overnight funds, while money lent for a period of more than one day and up to fourteen days is money at ‘short notice’. The lender bank does not get any security for money lent at call or short notice. The participants of call and notice money market are scheduled commercial banks (excluding RRBs), co-operative banks (other than land development banks) and primary dealers (PDs), both as borrowers and lenders. Non-bank institutions (other than PDs) are not permitted to participate in call/notice money market. Scheduled commercial banks usually borrow from this market to meet the requirements relating to cash reserve or statutory liquidity ratio. The decisions to borrow from, or lend in, the market are taken usually at the head office level and communicated to select branches for effecting the borrowing/lending.
RBI vide its Master Direction no. RBI/FMRD/2016-17/32 FMRD. Master Direction No. 2/2016-17 dated July 7, 2016 on “Money Market Instruments: Call/ Notice Money Market, Commercial Paper, Certificates of Deposit and Non- Convertible Debentures (original maturity up to one year)” provides the detailed guidelines on the prudential limits in respect of both outstanding and lending transactions in call/notice money market for scheduled commercial banks, cooperative banks and PDs. The eligible participants are free to decide the interest rates in call/notice money market. Computation of interest payable would be based on the methodology given in handbook of market practices brought out by the Fixed Income Money Market and Derivates Association of India (FIMMDA) and the eligible participants may adopt the documentation suggested by FIMMDA from time to time. The Call/Notice Money transactions can be executed either on NDS-Call, a screen–based, negotiated, quote-driven electronic trading system managed by the Clearing Corporation of India (CCIL), or over the counter (OTC) through bilateral communication. NDS-Call (a screen –based, negotiated, quote-driven system), do not require separate reporting, however, it is mandatory that all OTC deals should be reported within 15 minutes on NDS-Call reporting platform irrespective of the size of the deal.