Correct Option: B

Money supply in India includes the following: (i) Currency with the public; (ii) Demand deposits and time deposits with banks; (iii) Deposits with reserve Bank of India; and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because ofcash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public. This is mainly due to the expansion of banking facilities in the country. Almost all the money in the economy exists as bank deposits – and banks create these deposits simply by making loans.