Question

Which one of the following is defeciency of money market?
Absense of bill market
Diversification
liquidity
professional Management​

Answer 1

Answer:

Absence of bill market is the correct answer.

Kindly go through the explaination provided below.

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Explanation:

Another defect of the Indian money market was the absence of a bill market in which sort-term bills are bought and sold. A well-organised bill market isessential for the smooth working of the credit system. It is also necessary for linking up thecarious credit agencies ultimately and effectively to the central bank of the country. Thecommercial banks in India are aware of the utility of trade bills for the purpose of gettingaccommodation from the Reserve Bank. Still no bill market was developed in Indian due tocertain historical accidents specially the system of cash credit while borrowing from banks,the inadequate supply of commercial bills in the market and the preference of industrialistsand traders tomorrow from banks rather than rediscounting bill.