Money supply in the economy is the liability of the banking system (commercial as well as cooperative bank and RBI) and is defined as currency with the public, their demand and time deposits with banks and other deposits with RBI.
3 While SLR was hiked to preempt greater resources for the government for financing higher borrowing requirements, unfettered government spending posed inflation challenges which were managed through CRR increases. 3  approach in April 1998 4. In the MI approach, there was a greater emphasis on interest rate vis-à-vis quantity channels (money supply) for monetary policy formulation.