In 1987, participation was widened on the lending side and institutions were set up as market makers for the orderly development of the market. Select institutions were allowed to borrow from the money market on a term basis and the ceiling on interest rates was withdrawn in 1989.
New instruments like Certificates of Deposit (CDs) and Commercial Paper (CP) were introduced in 1989 and 1990 and interest rates on money market instruments became progressively market determined. In 1998, the RBI initiated a process of developing the overnight money market into a pure interbank market. The phasing out of non-banks from the money market was sequenced over the period 2000-05.