The Media analyst, Financial analyst all have been keenly waiting for today’s RBI policy. The question is will the RBI reduce rates or keep them as Status quo . Well I do not know the answer just sharing the observations there might be a pressure from finance minister to reduce the rates but RBI might not as the inflation is still not in the comfortable zone of RBI.
Well let the various analysts predict the policy, I would prefer sharing some basic definition of money from RBI, I do not know how many of you still remember them :
Narrow Money (M1) This is a fortnightly compilation. It consists of:
Currency notes and coins with the public (Excluding cash on hand of all banks).
Demand deposits (excluding inter-bank deposits) of all commercial and co-operative banks.
‘Other deposits’ held with the Reserve Bank of India (excluding balances in Account No. 1 of the International Monetary Fund, the Reserve Bank of India Employees’ pension, Provident and Guarantee Funds and ad hoc liability items which arise from time to time)
M2 : It consists of: M1 Savings deposits with Post Office Savings Banks.
M3 It consists of: M1 Time deposits of all commercial and co-operative banks (excluding inter bank time deposits)
M4 It consists of: M3 Total deposits with the Post Office Savings Organization (excluding National Savings Certificates).
L1 This is a Monthly Compilation. It consists of: M3 + All Deposits with the Post Office Savings Banks (Excluding National Savings Certificate).
L2 This is a Monthly Compilation. It consists of: L1 + Term Deposits with Term Lending Institutions and Refinancing Institutions (FIs) + Term borrowing by FIs + Certificates of Deposit issued by FIs
L3 This is a Quarterly Compilation. It consists of: L2 + Public Deposits of Non-Banking Financial Companies.