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(V) M4(a) M3, and(b) Total deposits with post office saving organisation (excluding National Saving Certificates).M4 measure of money supply which is the least liquid is not used for policy formulation because the total deposits with post office saving organisation do not come under the purview of the Reserve Bank.M0 is Reserve MoneyM1 is Narrow MoneyM3 is Broad MoneyKanha Sanju Agarwal
(IV) M3(a) M1, and(b) Net time deposits of all commercial banks and co-operative banks.Net time deposits of the banking institutions are not as liquid as their demand deposits are. Time deposits have a fixed maturity term. These cannot be withdrawn before maturity without loss of value. These are not payable on as the demand and do not enjoy cheque facilities.M3 measure of money supply is relevant for policy formulation to the extent that through the working of money multiplier it affects the supply of money.
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(III) M2(a) M1 and(b) Savings deposits with post office saving banks.Saving deposits with post office saving banks are not as liquid as the saving bank deposits with banks are. This is because of the fact that all post offices do not provide facility of checkable deposits in the saving bank account. Moreover, payments to other parties cannot be made through post office per month saving bank deposits and there are restrictions on the number of withdrawals. Since post offices do not come within the ambit of the RBI banking structure, their saving deposits do not from part of money supply for policy formulation.
(II) M1 OR NARROW MONEY ...Currency with PublicDemand deposits with the banking systemOther deposits with the RBIM1- is the narrow definition of money supply.Currency with the public is arrived at after deducting cash with banks from total currency in circulation, as reported by RBI.Demand deposits of banks include the saving bank deposits and current account deposits of all the scheduled and non-scheduled commercial banks and co-operative banks. This, however, do not include inter-bank demand deposits.Other deposits of the RBI include the demand deposits of quasi government institutions such as the Industrial Finance Corporation of India (IFCI), Industrial Development Bank of India (IDBI), National Bank for Agriculture and Rural Development (NABARD), etc., deposits of the Reserve Bank of India Employees Co-operative Credit Society, demand balances of foreign central banks ( yes right! Foreign central bank also keep deposit with RBI) and governments, the International Monetary Fund (IMF) and the World Bank (IBRD), etc.
(I) M0 OR RESERVE MONEY Currency in circulation Banker’s deposits with RBI Other deposits with RBICurrency in circulation includes notes in circulation, rupee coins and small coins. Rupee coins and small coins in the balance sheet of the Reserve Bank of India include ten-rupee coins issued since October 1969, two rupee-coins issued since November 1982 and five rupee coins issued since November 1985.Bankers’ deposits with the Reserve Bank represent balances maintained by banks in the current account with the Reserve Bank mainly for maintaining Cash Reserve Ratio (CRR) and as working funds for clearing adjustments.Other deposits with the RBI include the demand deposits of quasi government institutions such as the Industrial Finance Corporation of India (IFCI), Industrial Development Bank of India (IDBI), National Bank for Agriculture and Rural Development (NABARD), etc., deposits of the Reserve Bank of India Employees Co-operative Credit Society, demand balances of foreign central banks ( yes right! Foreign central bank also keep deposit with RBI) and governments, the International Monetary Fund (IMF) and the World Bank (IBRD), etc.
In India, the Reserve Bank of India employs as many as five measures of money supply, viz., M0, M1,M2 M3 and M4, for analysis and policy formulations.The main characteristics which separate one measure of money supply from the other is the varying degree of liquidity.Public does not hold money because it serves as a medium of exchange and measure of value but also because it acts as a store of value.Money acting as a store of value serves as the most liquid asset.Money as a liquid asset can be used for conducting business transactions and also for speculative purposesThe five measures of money supply used by the RBI are defined below and are being arranged in descending order of liquidity :-Kanha Sanju Agarwal
THE CONCEPT OF MONEY SUPPLY ....There is no unique definition of money, either as a concept in economic theory or as measured in practice.Money is a means of payment and thus a lubricant that facilitates exchange.Money also acts as a store of value and a unit of account.In the real world money provides monetary services along with tangible remuneration.It is for this reason that money has to have relationship with the activities that economic entities pursue.Money can, therefore, be defined for policy purposes as the set of liquid financial assets, the variation in the stock of which could impact on aggregate economic activity.As a statistical concept, money could include certain liquid liabilities of a particular set of financial intermediaries or other issuers.Thus, like other countries, a range of monetary and liquidity measures are compiled in India.Kanha Sanju Agarwal
My Daily Timetable [ Monday to Friday ]Waking up by :- 6:00 AM(Having a hot water drink)Getting fresh and all by 6:30 AM(Having badam chuara and kishmish)Studying from 6:30 to 8:30 AMGetting ready for class / Breakfast by 9:30 AMLemon water after class by 12 NoonLunch by 2:00 PMStudying from 2:30 PM to 4:30 PMHaving grams and moong by 5:00 PMYoga and relax from 5:00 PM to 6:00 PMStudying from 6:00 PM to 8:00 PMDinner by 9:00 PM9:00 PM to 10:00 PM Discussion over whole day work and studies with Kanha10:00 PM to 11:00 PM Ludo / Milk / ChawanprashGoing to bed by 11:00 PM Sakshi Agrawal