| | | 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| | plus demand deposits with the bank (deposits which can be withdrawn without notice) plus |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 |
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