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    Discount Market

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    Dheeraj Shriyan
    The document discusses discount markets and the Discount and Finance House of India (DFHI). It defines discount markets as where short-term trade bills are discounted by financial institutions like banks. DFHI was established in 1988 to provide liquidity in money markets by dealing in various money market instruments and developing secondary markets. Its role is to facilitate short-term liquidity management and integrate different money market segments. It deals in government securities, commercial paper, certificates of deposits and more. DFHI aims to minimize liquidity balances, act as an authorized dealer for government bonds, and expand and develop primary and secondary financial markets.

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    Discount Market

    Uploaded by

    Dheeraj Shriyan
    114 views10 pages
    The document discusses discount markets and the Discount and Finance House of India (DFHI). It defines discount markets as where short-term trade bills are discounted by financial institutions like banks. DFHI was established in 1988 to provide liquidity in money markets by dealing in various money market instruments and developing secondary markets. Its role is to facilitate short-term liquidity management and integrate different money market segments. It deals in government securities, commercial paper, certificates of deposits and more. DFHI aims to minimize liquidity balances, act as an authorized dealer for government bonds, and expand and develop primary and secondary financial markets.

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    Finance

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    The document discusses discount markets and the Discount and Finance House of India (DFHI). It defines discount markets as where short-term trade bills are discounted by financial institutions like banks. DFHI was established in 1988 to provide liquidity in money markets by dealing in various money market instruments and developing secondary markets. Its role is to facilitate short-term liquidity management and integrate different money market segments. It deals in government securities, commercial paper, certificates of deposits and more. DFHI aims to minimize liquidity balances, act as an authorized dealer for government bonds, and expand and develop primary and secondary financial markets.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    114 views10 pages

    Discount Market

    Uploaded by

    Dheeraj Shriyan
    The document discusses discount markets and the Discount and Finance House of India (DFHI). It defines discount markets as where short-term trade bills are discounted by financial institutions like banks. DFHI was established in 1988 to provide liquidity in money markets by dealing in various money market instruments and developing secondary markets. Its role is to facilitate short-term liquidity management and integrate different money market segments. It deals in government securities, commercial paper, certificates of deposits and more. DFHI aims to minimize liquidity balances, act as an authorized dealer for government bonds, and expand and develop primary and secondary financial markets.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    Discount Markets & DFHI

    BY
    DHEERAJ.P
    According
    to Crowther, "The
    money market is a
    name given to the
    various firms and
    institutions that deal in
    the various grades of
    near money."

    Discount Market

    Discount market refers to the
    market where short-term genuine
    trade bills are discounted by
    financial intermediaries like
    commercial banks. When credit
    sales are effected, the seller draws
    a bill on the buyer who accepts it
    promising to pay the specified
    sum at the specified period. The
    seller has to wait until the maturity
    of the bill for getting payment.
    Objectives of Discount Market
    Smoothening Liquidity
    Integration
    Market Maker
    Promoting Market
    Investment Avenue

    DFHI
    Discount and Finance House of India Ltd. (DFHI), a unique institution of
    its kind, was set up in April 1988. The share capital of DFHI is Rs 200
    crores, which has been subscribed by Reserve Bank of India (10.5%), Public
    sector banks (62%) and Financial Institutions (26.6%). The discount has
    been established to deal in money market instruments in order to provide
    liquidity in the money market. Thus the task assigned to DFHI is to
    develop a secondary market in the existing money market instruments.
    The establishment of a discount House was recommended by a Working
    Group on Money market. The main objective of DFHI is to facilitate the
    smoothening of the short term liquidity imbalances by developing an active
    money market and integrating the various segments of the money market
    At preset DFHIs activities are restricted to:
    1. dealing in 91 days and 364 days Treasury Bills
    2. re-discounting short term commercial bills.
    3. participating in the inert bank call money, notice money and
    term deposits
    4. Dealing in Commercial Paper and Certificate of deposits.
    5. Government dated Securities

    Importance of DFHI
    Minimizing Liquidity balances.
    Authorized institutions for
    government securities.
    REPO Facility.
    Expansion of money market.
    Developing Primary and Secondary
    market in financial instruments.
    Challenges of DFHI
    Mounting Competition.
    Uncertainties of interest rates.
    Abundance of liquidity in the system.
    Falling yields for government securities.
    Rapid changes in market conditions and regulatory framework.
    Role of DFHI

    Functions as market maker
    in Certificate of Deposits
    market
    Offers bid and offer rate for
    Certificate of Deposits
    Acts as an ideal conduct for
    disinvestments of Certificate
    of Deposits holdings
    Engages in buying
    Certificate of Deposits from
    the bank at bid discount rate

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