CALL LOANS

These loans are also called ‘Loans at call and Short Notice’. The call loans are generally granted for an overnight use or maximum for seven days. Commercial bank generally grant call loans to bill brokers, discount house and stock exchange dealers. The commercial banks also lend their surplus funds on call to other banks as and when they need them. Call loans are usually made without any security. The very short period or call loans are dealt in the call money market which exists in almost all developed and underdeveloped money markets.

BANK DEPOSIT MANAGEMENT (BDM)

Fund Manager has to keep particular portion of his assets in bank to maintain his cash liquidity. On deposits, the bank pays interest to the investors on the basis of the amount deposited by them.

Bank credit rating, deposited amount and rate of return are the major tools of BDM.

TERM DEPOSIT RECEIPT (TDR)

In term Deposit Account investor deposits a particular amount of money for a fixed term and condition in the bank and the bank issues a receipt of the same called Term Deposit Receipt (TDR).

In TDR the bank undertakes to pay amount to the depositor on the maturity date according to the agreed terms and conditions of the TDR.

CLEAN PLACEMENT

Clean money market placement” means deployment of funds without taking any guarantee or pledge/ assurance.

TYPE OF CLEAN PLACEMENT

  • Letter of Placement
  • Certificate of Investment
  • Letter of Placement
  • Certificate of Deposit
  • Wakala Agreement
  • Musharika Certificate
  • Letter of Placement

GOVERNMENT SECURITIES

TREASURY BILL

  • Issued By Ministry of Finance
  • Zero Coupon Bond
  • Highly Liquid Debt Instruments
  • Short Term Financial Instrument
  • Generally issued for 3 Month, 6 Month and 1 Year.
  • Tradable Securities

INVESTMENT BONDS

  • Issued By Ministry of Finance
  • Semi- annual coupon Bond
  • Moderate Liquid Debt Instruments
  • Medium and Long Term Financial Instrument
  • Issued for 3, 5, 10, 20, and 30 years.
  • Tradable Securities

CORPORATE BONDS

TERM FINANCE CERTIFICATES (TFC)

  • Can be issued by any corporate body to raise money in order to fulfill his financial needs.
  • Call or Put option
  • Floor and Cap
  • Tradable Securities
  • Coupon rate on the instrument may be fixed or floating.
  • Principal and interest amount is paid to investor’s as per agreed redemption schedule

SUKUK

  • An Islamic financial certificate, similar to a TFC, that complies with Shariah, Islamic religious law.
  • Call or Put option
  • Tradable Securities
  • Floor and Cap
  • Coupon rate on the instrument may be fixed or floating.
  • Principal and interest amount is paid to investor’s as per agreed rental schedule.

REPURCHASE AGREEMENT (REPO)

A repurchase agreement (repo) is an arrangement involving the sale of securities at a specified price with an assurance to purchase back the same or similar securities on a specified future date at a fixed price.

reverse repo is the same transaction seen from the other side; that is, an agreement whereby a security is purchased at a specified price with a commitment to sell back the same or similar securities on a specified future date at a fixed price.

Repo and Reverse Repo are executed most often against government securities

COMMERCIAL PAPER

  • An unsecured obligation issued by a corporation or bank to finance its short-term credit needs, such as accounts receivable and inventory.
  • Maturities typically ranging for the maximum of 1 Year.
  • Commercial paper is usually issued by companies with high credit ratings, meaning that the investment is almost always relatively low risk.
  • Issued at a discount, reflecting current market interest rates.
  • Traded Instrument

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