The term Narrow money is interpreted from the angle of liquidity. Most liquid bank deposits are included under narrow money besides the base money components like currency. Or in other words, Narrow Money (M1) is a concept of money supply that consists of base money and the most liquid form of deposits in the banks and post offices.
Narrow Money (M1) = Currency with the Public + Demand Deposits with the Banking System + ‘Other’ Deposits with RBI
= Currency with the Public + Current Deposits with the Banking System + Demand Liabilities Portion of Savings Deposits with the Banking System + ‘Other’ Deposits with RBI
