Question

According to the {Working Group on Money Supply: Analytics and Methodology of Compilation (1998) constituted by the Reserve Bank of India (RBI), which of the following is NOT a component of the new monetary aggregate NM1?

• A. Currency with the public
• B. Demand deposits with the banking system
• C. Short-term time deposits of residents
• D. ‘Other’ deposits with the RBI

Hint:

NM\textsubscript{1} = Currency with public + Demand deposits + Other deposits with RBI. Time deposits belong to broader aggregates.

Answer 1

The Correct Option is C

Step 1: Recall definition of NM1.
NM\textsubscript{1} is a narrow money aggregate introduced by the RBI in 1998. It includes:
- Currency with the public (A)
- Demand deposits with the banking system (B)
- ‘Other’ deposits with the RBI (D)
Step 2: Identify the exclusion.
Short-term time deposits (C) are part of NM\textsubscript{2} or broader money aggregates, not NM1.
Thus, the correct answer is (C).