Which of the following is not a feature of Indian call money market?

The correct answer is "The rate of interest in the call money market is highly stable."

To understand why this is the correct choice, let us break down the features of the Indian call money market:

1. Nature of the Call Money Market: The call money market is a market for extremely short-term finance, typically repayable on demand with a maturity period of one day (overnight) to fourteen days. Because funds are needed or lent for very short durations to meet immediate liquidity requirements, the market is highly sensitive to daily changes in demand and supply of funds, making it competitive. Thus, the statement "The call money market is highly sensitive and competitive market" is a true feature.
2. Participants: Scheduled commercial banks, co-operative banks, and primary dealers are the main participants in this market. While non-bank institutions were permitted in the past, the market has transitioned to a pure inter-bank market. Therefore, the statement "Mainly the banks participate in the call money market" is a true feature.
3. Purpose: The market serves as an institutional arrangement that facilitates the pooling of funds. Banks with temporary surplus funds lend them to banks facing a temporary shortage of funds to meet their reserve requirements (like Cash Reserve Ratio or CRR). Thus, the statement "Call money market provides the institutional arrangement for making the temporary surplus of some banks available to other banks which are temporary in short of funds" is also a true feature.
4. Interest Rate Volatility: The interest rate charged in this market is known as the call rate. Because of the highly sensitive demand and supply dynamics on any given day, call rates fluctuate widely—often hour to hour—and are highly volatile rather than stable. Therefore, the statement "The rate of interest in the call money market is highly stable" is incorrect, making it the feature that does not belong to the Indian call money market.