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Banking Laws-and

Regulations

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Monetary Aggregates

M-0= Reserve Money- currency incirculation + banks deposits wihRBI+other deposits with RBI

M-1= Currency with the public+demand deposits withBanks+Other deposits with RBI

M-2= M1+Term deposits withBanks+CDs (upto one yearmaturity) excluding FCNRdeposits.

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Monetary Aggregates

M3= M2 + term deposits with bankswith maturity of over 1 year + callborrowings by banks fromfinancial corporations

M0 is called Reserve Money M1 is called narrow money

M2 and M3 are called Broad money

other deposits with RBI include currentdeposits of foreign central banks, financialinstns etc.

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Liquidity Aggregates

L1= M3 + all deposits with Post OfficeSavings bank excluding NSCs

L2= L1 + term deposits with term lending

instiutions and refinance instns. + termbowoorings by FIs and CDs issuede by FIs

L3 =L2 + public deposits of Non-banking

finance companies.

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The Govt-priorities

Advances to Priority Sector-40% of net credit.(agriculture, SSI,SRTO, Small Business, Self-

employed, Educational Loans, Housing Loansupto Rs. 20 lacs.)

Finance to Agriculture- 18% of net credit Of which Indirect finance not over 25% (4.5% of total credit) Investment in RIDF/NABARD/REC for shortfall Finance to weaker section-10%

Small & Marginal farmers,TC/AL-5 acres or