Consider the following markets:
- 1.Government Bond Market
- 2.Call Money Market
- 3.Treasury Bill Market
- 4.Stock Market
How many of the above are included in capital markets?
Answer & explanation
Answer: (b) Only two
The capital market deals in long-term funds (more than a year), such as government bonds and shares, while the money market deals in funds for up to one year, such as call money and treasury bills. So only the government bond market and the stock market are capital markets.
- ✓ 1. Government bonds, or dated securities, have an original maturity of one year or more, so they are long-term capital-market instruments.
- ✗ 2. Call money is overnight inter-bank borrowing and lending, a money-market transaction.
- ✗ 3. Treasury bills are short-term (91, 182 and 364 days) zero-coupon government securities, which the RBI classes as money market instruments.
- ✓ 4. Shares traded on the stock market are long-term (perpetual) claims on companies, the core of the capital market.
Remember · Money market: up to 1 year (call money, T-bills, CPs, CDs, repos). Capital market: over 1 year (shares, dated G-secs/bonds, debentures).
Sources
- Reserve Bank of India, FAQs on Government Securities Market ↗ “Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more). … Money market instruments include call money, repos, T- Bills (for details refer para 1.3), Cash Management Bills (for details refer para 1.4), Commercial Paper, Certificate of Deposit”
Question and answer: UPSC's official GS Paper I (2023, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·