| Components of Money Supply | |||||
| M1 | Consists of currency with the public (ie notes & coins in circulation minus cash with the banks) | ||||
| plus demand deposits with the bank (deposits which can be withdrawn without notice) plus | |||||
| other deposits with RBI (usually negligible). Also called narrow money | |||||
| M2 | M1 | + saving deposits + Certificate of Deposits (CDs) + term deposits maturing within a year. | |||
| M3 | M2 | + term deposits with maturity more than a year + term borrowing of banking system. Also | |||
| known as broad money. | |||||
| L1 | M3 | + all Deposits with the Post Office Savings Banks (excluding National Savings Certificates) | |||
| L2 | L1 + Term Deposits with Term Lending Institutions and Refinancing Institutions (FIs) + Term | ||||
| Borrowing by FIs+ Certificates of Deposit issued by FIs; and | |||||
| L3 | L2 + Public Deposits of Non-Banking Financial Companies | ||||
