BANKING AFFAIRS

Detailed explanation-1: -Q. In which year does Reserve Bank of India introduced the concept of classification of money into M1, M2, M3 and so on? Notes: The measures of money supply in India are classified into four categories M1, M2, M3 and M4 along with M0. This classification was introduced in April 1977.

Detailed explanation-2: -The measures of money supply in India are classified into four categories M1, M2, M3, and M4 along with M0. This classification was introduced in April 1977 by the Reserve Bank of India.

Detailed explanation-3: -M1, M2, M3, and M4 were the four monetary aggregates used by the RBI between 1977 and 1998 to calculate the money supply. The idea of reserve money was also used by the central bank. However, in 1998, the measurement criteria were changed. The designations are now M0, M1, M2, and M3.

Detailed explanation-4: -M0 = Currency notes + coins + bank reserves. M1 = M0 + demand deposits. M2 = M1 + marketable securities + other less liquid bank deposits. M3 = M2 + money market funds. M4 = M3 + least liquid assets.

Detailed explanation-5: -The designations are now M0, M1, M2, and M3. M3 is equal to M1 plus time deposits made with banks. M2 is calculated as M1 plus post office savings bank deposits. M1 is equal to money in circulation plus demand deposits in the banking system (savings account, current account).