Are Deposits Money?

We know that the cash deposited into the accounts of the banks by the account holders are termed as deposits. We also know that the deposits are the borrowings of the banks from the people. These are repayable on demand. As and when depositors will make demand properly through cheques, banks are bound to make payment in cash. In this sense deposits are money (bank money).

Deposits into two types:

(a). Demand Deposits

(b). Time Deposits

Money is also two categories:

(a). Narrow Money M1 (Currency Outside Bank + Deposit with B. Bank + Demand Deposit)

(b). Broad Money M2 (Currency Outside Bank + Deposit with B.Bank + Demand Deposit + Time Deposit).