The sum of which of the following constitutes Broad Money in India?

1. Currency with the Public
2. Demand deposits with banks
3. Time deposits with banks
4. Other deposits with RBI

Choose the correct answer using the codes given below:

1. I and II
2. I, II and III
3. I, II, III and IV
4. I, II and IV

Explanation

Option (c) is correct

• In India, Broad Money (M3) is defined as M1 plus net time deposits of the banking system.
• M1 includes:
  • Currency with the public,
  • Demand deposits with banks, and
  • ‘Other’ deposits with the Reserve Bank of India.
• Thus, M3 comprises:
  • Currency with the public,
  • Demand deposits with banks,
  • Time (term) deposits with banks, and
  • ‘Other’ deposits with the Reserve Bank of India — as reflected in official monetary aggregates.

Answer: (c) I, II, III and IV