How to calculate money stocks in India

  •                                                           Money stocks   
  • Money Indian Economy

  • In the previous article, we saw information about money and currency. In this article, we will understand the money stocks.

  • Money stocks in India are regulated by the Reserve Bank. The Reserve Bank uses the concept M0, M1, M2, M3.
  • In this, the money released by the Reserve Bank, money from the public, the money in the bank, post office, money generated from the bank is counted.

  • According to the old method, five methods were used like M0, M1, M2, M3, M4. The Reserve Bank special committee has suggested changes in the new seven methods of M0, M1, M2, M3, L1, L2 and L3.

  • According to the old method

  • M0 - Bank deposits in the Reserve Bank + People's currency notes and coins + 
  • other deposits in the Reserve Bank

  • M1 - People's currency notes and coins+ Demand deposits of people in the 
  • Bank + Others deposits in the Reserve Bank

  • M2 - M1 + Savings deposits in the post office

  • M3 - M1 +Fixed Deposits in Banks

  • M4 - M3 + Total deposits in the post office
  • Money Indian Economy

  • According to new methods

  • M0 - Bank deposits in the Reserve Bank + People's currency notes and coins, + other deposits in the Reserve Bank.


  •  M1- People's currency notes and coins + Demand deposits of people in the Bank + Others deposits in the Reserve Bank

  • M2 - M1 + current accounts deposits sold by the bank + 1 year deposit

  • M3 - M2 + term deposits with more than 1 year + Bank's Demand Due and Term Loan

  • L1 - M3 + Post Office Deposits (excluding National Savings Certificates)

  • L2 - L1 + Fixed Deposits from refinancing and term loan institutions + Fixed debt from these institutions + Certified deposits of these institutions.

  • L3 - L2 + Public deposits in non-banking financial institutions 

  • How to work all these concept we will learn in next article....stay connected 

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