📑 Topics on this page (Jump to Topic):
📌 1. Money Market vs Capital Market
| Point | Money market | Capital market |
|---|---|---|
| Tenure | Short-term (up to 1 year) | Long-term (over 1 year) |
| Instruments | Call money, Treasury bills, commercial paper (CP), certificates of deposit (CD) | Shares, debentures, bonds, mutual fund units |
| Regulator | RBI | SEBI |
- Treasury bills: issued by RBI for the Centre — 91, 182 and 364 days; issued at a discount.
- Call money = one-day loans; notice money = 2 to 14 days.
- The capital market has two parts: primary (new issues — IPO, FPO) and secondary (trading of existing shares on stock exchanges).
📌 2. SEBI & Stock Markets
| Body | Fact |
|---|---|
| SEBI | Set up 12 April 1988; statutory status 30 January 1992 (SEBI Act 1992); HQ Mumbai; chair (as of October 2026) Tuhin Kanta Pandey |
| BSE | 1875, Asia's oldest stock exchange; Dalal Street, Mumbai; index Sensex (30 companies, base 1978-79 = 100) |
| NSE | Set up 1992, trading since 1994; first fully electronic exchange; index Nifty 50 (50 companies, base 1995 = 1000) |
- Bull (expects prices to rise) vs bear (expects prices to fall).
- In 2015 the Forward Markets Commission (FMC) merged into SEBI — commodity markets are now under SEBI too.
- Mutual funds pool small investors' money for professional investment; the first was UTI (1964); regulated by SEBI.
- Credit rating agencies: CRISIL (1987, first), ICRA, CARE — registered with SEBI.
- IFSCA (2020): unified regulator for international financial services centres at GIFT City, Gujarat.
- FDI = long-term investment with management control; FPI = portfolio investment in shares/bonds (under 10% stake), more volatile ("hot money").
📌 3. Insurance & Pension
| Body | Fact |
|---|---|
| Life Insurance Corporation (LIC) | 1 September 1956 (by nationalising 245 companies); HQ Mumbai; IPO in 2022 |
| General Insurance Corporation (GIC Re) | Under the 1972 Act; general insurance nationalised in 1973 |
| IRDAI | IRDA Act 1999 (Malhotra Committee); HQ Hyderabad; chair (as of October 2026) Ajay Seth (since September 2025) |
| PFRDA | Set up 2003, statutory under the PFRDA Act 2013; regulates NPS |
- National Pension System (NPS): for new Central government employees from 1 January 2004; open to all citizens since 2009.
- Unified Pension Scheme (UPS): an option under NPS for Central government employees from 1 April 2025 — assured pension of 50% of the average basic pay of the last 12 months (with 25 years of service).
- Atal Pension Yojana (2015): for the unorganised sector, ₹1,000-5,000 monthly pension; administered by PFRDA.
⚠️ Exam Traps:
- IRDAI is headquartered in Hyderabad, not Mumbai.
- A Treasury bill is a money-market instrument, not a capital-market one.
- Sensex = 30 companies (BSE); Nifty = 50 companies (NSE).
- SEBI was formed in 1988 but became statutory only in 1992.
💡 Memory Tip: S-30, N-50; BSE 1875 is oldest; IRDAI = Hyderabad.
📌 4. Practice MCQs
📝 Practice MCQs (prepared by SF Prep — not PYQs)
Q1. Which of these is a money-market instrument? Practice
Correct answer: (C)
Treasury bills run for less than a year, so they are money-market instruments.
Treasury bills run for less than a year, so they are money-market instruments.
Q2. For which tenures are Treasury bills issued in India? Practice
Correct answer: (D)
RBI issues 91-, 182- and 364-day Treasury bills at a discount for the Centre.
RBI issues 91-, 182- and 364-day Treasury bills at a discount for the Centre.
Q3. Call money is a loan for: Practice
Correct answer: (B)
Call money = overnight/one day; notice money = 2 to 14 days.
Call money = overnight/one day; notice money = 2 to 14 days.
Q4. A company selling shares to the public for the first time is called: Practice
Correct answer: (B)
An Initial Public Offering (IPO) is the first public issue in the primary market; a later one is an FPO.
An Initial Public Offering (IPO) is the first public issue in the primary market; a later one is an FPO.
Q5. When did SEBI get statutory status? Practice
Correct answer: (C)
SEBI was formed in 1988 and became statutory on 30 January 1992 under the SEBI Act 1992.
SEBI was formed in 1988 and became statutory on 30 January 1992 under the SEBI Act 1992.
Q6. Who chairs SEBI as of October 2026? Practice
Correct answer: (D)
Tuhin Kanta Pandey is SEBI chair; Ajay Seth chairs IRDAI.
Tuhin Kanta Pandey is SEBI chair; Ajay Seth chairs IRDAI.
Q7. Which is Asia's oldest stock exchange? Practice
Correct answer: (A)
BSE was founded in 1875 and is Asia's oldest stock exchange.
BSE was founded in 1875 and is Asia's oldest stock exchange.
Q8. How many companies are in the Sensex? Practice
Correct answer: (D)
Sensex tracks 30 leading BSE companies; Nifty tracks 50.
Sensex tracks 30 leading BSE companies; Nifty tracks 50.
Q9. Nifty 50 is the index of which exchange? Practice
Correct answer: (A)
Nifty 50 is the National Stock Exchange's main index (base 1995 = 1000).
Nifty 50 is the National Stock Exchange's main index (base 1995 = 1000).
Q10. An investor who expects share prices to fall is called a: Practice
Correct answer: (B)
A bear expects a fall; a bull expects a rise.
A bear expects a fall; a bull expects a rise.
Q11. The Forward Markets Commission (FMC) merged into which body? Practice
Correct answer: (C)
The FMC merged into SEBI in 2015, bringing commodity markets under SEBI.
The FMC merged into SEBI in 2015, bringing commodity markets under SEBI.
Q12. Which was India's first mutual fund? Practice
Correct answer: (C)
The Unit Trust of India (1964) was India's first mutual fund.
The Unit Trust of India (1964) was India's first mutual fund.
Q13. When was the Life Insurance Corporation (LIC) set up? Practice
Correct answer: (D)
LIC was formed on 1 September 1956 by nationalising 245 life insurers.
LIC was formed on 1 September 1956 by nationalising 245 life insurers.
Q14. Where is IRDAI headquartered? Practice
Correct answer: (A)
The insurance regulator IRDAI is headquartered in Hyderabad.
The insurance regulator IRDAI is headquartered in Hyderabad.
Q15. Who regulates the National Pension System (NPS)? Practice
Correct answer: (B)
The Pension Fund Regulatory and Development Authority (PFRDA) regulates NPS and Atal Pension Yojana.
The Pension Fund Regulatory and Development Authority (PFRDA) regulates NPS and Atal Pension Yojana.
Q16. From when has the Unified Pension Scheme (UPS) applied to Central government employees? Practice
Correct answer: (A)
UPS has applied from 1 April 2025 as an option under NPS.
UPS has applied from 1 April 2025 as an option under NPS.
Q17. What is the key difference between FDI and FPI? Practice
Correct answer: (C)
FDI involves control/a stake of 10% or more; FPI is portfolio investment that can exit quickly.
FDI involves control/a stake of 10% or more; FPI is portfolio investment that can exit quickly.
Q18. Which is India's first credit rating agency? Practice
Correct answer: (D)
CRISIL, set up in 1987, is India's first credit rating agency.
CRISIL, set up in 1987, is India's first credit rating agency.
Q19. Who regulates international financial services centres at GIFT City? Practice
Correct answer: (B)
IFSCA (2020) is the unified regulator for banking, capital markets and insurance in the IFSC.
IFSCA (2020) is the unified regulator for banking, capital markets and insurance in the IFSC.
Q20. What is the base year of the Sensex? Practice
Correct answer: (B)
Sensex base is 1978-79 = 100; Nifty base is 1995 = 1000.
Sensex base is 1978-79 = 100; Nifty base is 1995 = 1000.