Time deposits

unit of value 

money itself is medium of exchange

The introduction of plastic money (in the form of debit card etc.) has enhanced the convenience of both the parties-the depositor and the bank. This is  attributed to the portability factor, along with the convenience factor, which in turn has led to the popularity of plastic money over the bank money in the form of cheques etc. to be encashed in the banks only. Consumer awareness is thus promoted through such innovations.

Under open market operations, RBI purchases or sells governments securities to general public for the purpose of increasing and decreasing the stock of money in an economy. The purchase or sale of securities controls money in the hand of public as they deposit or withdraw money from the commercial banks. Thus, money creation by commercial banks gets affected.suppose, the central bank purchases securities of rs 1000 from a bond holder with issuing a cheque.
The seller of the bond suppose, the central bank purchases securities of rs 1000 from a bond holder with issuing a cheque. The seller of the bond produces this cheque of rs 1000 to his commercial bank. The commercial bank credits the account of the seller by rs 1000 and the deposits of the bank go up by rs 1000, which increase the credit creation of commercial banks. Thus, the central bank controls the process of money creation by commercial banks by open market operations

The difference between money and high powered money lies in the fact that the former consists of currency and demand deposits and the later consists of currency and cash reserves with the bank.High powered money is also known as 'monetary base'.

The primary function of money is acting as s medium of exchange berween two parties involved in a transaction.It avoids the practical problems of wastage of time and resources, involved with the barter system of exchange and it improves the transactional efficiency.it also promotes allocational efficiency in the trade and production of goods and services.

Money serves as a unit of value or common measure of value in terms of which the value of all goods and services are measured.This helps in measuring the exchange values of commodities.The prices of all the goods and services can be fixed in terms of money and the problem of expressing of the value of each commodity in terms of quantities of other goods can be avoided. 
This function of money makes it possible to keep business accounts.It would not be possible to keep business account unless all business transactions are expressed in terms of money.

Bank of issue : The central bank of country has the sole authorityof issuing currency notes and coins in that country. All the currency issued by the central bank are unlimited legal tenders. no other commercial bank or financial institution can issue these currency notes except central bank. Hence, the central bank is also known as bank of issue.

Banker's bank : central bank keeps the cash balance of commercial banks and issue loans to them on requirements, in the same manner as the commercial banks do for its customers. A central bank has almost the same relation which the other commercial banks of the country that the commercial banks have with the common public. That is why, the central bank is also called as banker's bank

If LRR is 0.1,then deposit multiplier = Deposit multiplier = \(\frac { 1 }{ LRR } =\frac { 1 }{ 0.1 } =10\)

Instruments of monetary policy of the central bank are broadly classified as:
(i) Quantitative Instruments
(ii) Qualitative Instruments
(i) Quantitative Instruments  of monetary policy focus on the overall supply of money in the economy. These instruments relate to two policy rates and two policy ratios. The policy rates are (i) Bank rate (ii) Repo rate
The two policy ratios are (i) CRR (ii) SLR.
(ii) Qualitative Instruments of monetary policy are those instruments which focus on selected sectors of the economy. The banks are advised to be selective in offering loans, specially when the economy is gripped in the inflationary spiral.

The commercial banks perform two basic functions.
They accept deposits: Commercial banks accepts deposits from the public. People can deposit their cash balances as chequable deposits or non-chequeable deposits (fixed deposits).
They advance loans: Commercial banks advance loans mostly for productive purposes like for purchasing plant and machinery. They also offer loans for consumption purposes as well, like for buying consumer durables like cars

Legal tender refers to money which has the power to discharge debt obligations, and a creditor cannot refuse to accept it in return for his credit. Fiat money is any money that is under the fiat or order from the government to act as money.