Consider the following statements regarding the monetary aggregates published by the Reserve Bank of India (RBI):
1. M1 includes currency with the public and non-interest bearing deposits with the banking sector, including that of RBI.
2. M2 and M4 include post office savings bank deposits and are extensively used for policy purposes.
3. M3 captures the complete balance sheet of the banking sector, including RBI, commercial banks, and co-operative banks.
4. The Reserve Money is compiled with a weekly periodicity, while M3 is computed fortnightly.

Which of the statements given above are correct?
(a) 1 and 3 only
(b) 2 and 4 only
(c) 1, 3 and 4 only
(d) 1, 3 and 2 only

Question

Consider the following statements regarding the monetary aggregates published by the Reserve Bank of India (RBI):
1. M1 includes currency with the public and non-interest bearing deposits with the banking sector, including that of RBI.
2. M2 and M4 include post office savings bank deposits and are extensively used for policy purposes.
3. M3 captures the complete balance sheet of the banking sector, including RBI, commercial banks, and co-operative banks.
4. The Reserve Money is compiled with a weekly periodicity, while M3 is computed fortnightly.

Which of the statements given above are correct?
(a) 1 and 3 only
(b) 2 and 4 only
(c) 1, 3 and 4 only
(d) 1, 3 and 2 only

ONLiNE UPSC · Accepted Answer

Statement 1 is correct: M1 consists of currency with the public, demand deposits with the banking system, and other deposits with the RBI (which are non-interest bearing).

Statement 2 is not correct: While M2 and M4 do include post office savings bank deposits, they are not extensively used for policy purposes. Instead, M1 and M3 are the aggregates extensively used for policy and academic purposes. M2 and M4 are less widely used.

Statement 3 is correct: M3 is considered broad money and captures the complete balance sheet of the banking sector (commercial banks and co-operative banks), but it excludes the RBI&rsquo;s own deposits with itself. However, it broadly represents the banking sector&rsquo;s liabilities.

Statement 4 is correct: Reserve Money (also called Monetary Base or M0) is compiled weekly using RBI&rsquo;s balance sheet data, while M3 is compiled on a fortnightly basis.

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M Question 1	⏱ 0
Consider the following statements regarding the monetary aggregates published by the Reserve Bank of India (RBI): 1. M1 includes currency with the public and non-interest bearing deposits with the banking sector, including that of RBI. 2. M2 and M4 include post office savings bank deposits and are extensively used for policy purposes. 3. M3 captures the complete balance sheet of the banking sector, including RBI, commercial banks, and co-operative banks. 4. The Reserve Money is compiled with a weekly periodicity, while M3 is computed fortnightly. Which of the statements given above are correct? (a) 1 and 3 only (b) 2 and 4 only (c) 1, 3 and 4 only (d) 1, 3 and 2 only