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IV. Monetary and liquidity Conditions

The liquidity conditions, which transited from surplus to deficit in the wake of 3G/BWA auctions in May 2010, have generally remained in the deficit mode since then, reflecting the stance of monetary policy. Normalisation of policy rates, along with narrowing of the LAF corridor, and the shift from surplus to deficit liquidity conditions have resulted in an effective increase in the policy rate by 275 basis points since March 2010. Even as reserve money has grown at a fairly rapid pace, broad money (M3) growth continues to remain relatively subdued, reflecting the decelerated growth in aggregate deposits. With persistent deficit liquidity conditions, banks have started to scale up their deposit mobilisation efforts, as reflected in the higher deposit interest rates being offered since July 2010.

IV.1 The non-disruptive normalisation of the monetary policy has significantly altered the liquidity and interest rate conditions over a few months. With repo emerging as the normal mode under the liquidity adjustment facility (LAF), and the consequent effective increase in the policy rate by 275 basis points, the transmission of monetary policy has also witnessed signs of strengthening. Since March 2010, the Reserve Bank has raised repo and reverse repo rates by 125 basis points and 175 basis points, respectively, which narrowed the LAF corridor from 150 basis points to 100 basis points. With continued build-up of government cash balances and increase in currency with the public, the LAF operations have remained mostly in deficit (injection) mode since June 2010.

IV.2 During the first quarter of the year, non-food credit growth of scheduled commercial banks (SCBs) exceeded the indicative trajectory set out in the Monetary Policy Statement for 2010-11. Notwithstanding the one-off increase in credit demand associated with payment for telecom spectrums, the growth of non-food credit during the second quarter remained close to the Reserve Bank’s indicative projection. Money supply (M3) growth, which had started picking up from July 2010 registered deceleration towards the end of the quarter and showed acceleration for the latest fortnight for which data are available. The subdued growth in M3 has been largely conditioned by the decelerated growth in deposits, which account for over 85 per cent of money supply. On the sources side, there has been a considerable dip in the rate of growth of banking system’s credit to the government (Table IV.1).

Liquidity Management

IV.3 During 2010-11 so far, the centre’s surplus balance with the Reserve Bank has been a key driver of autonomous liquidity. Currency with the public, which registered high growth during the year so far, has been another key determinant of autonomous liquidity. The LAF window of the Reserve Bank, which remained in surplus mode for nearly 18 months, switched into deficit mode towards end- May 2010 and largely maintained the trend subsequently (Chart IV.1).

Table IV.1 : Monetary Indicators

(Amount in ` crore)

Item

Outstanding as on October 8, 2010

Variation (year-on-year)

October 9, 2009

October 8, 2010

Amount

Per cent

Amount

Per cent

1

2

3

4

5

6

I.

Reserve Money*

11,73,195

1,02,793

11.8

2,02,615

20.9

 

(Reserve Money adjusted for CRR changes)

   

(19.5)

 

(15.4)

II.

Broad Money (M3)

59,62,123

8,45,490

19.5

7,88,278

15.2

III.

Components of M3 (a + b + c)

         

 

a) Currency with the Public

8,33,513

97,734

16.2

1,32,208

18.9

 

b) Aggregate Deposits

51,24,022

7,48,202

20.1

6,55,915

14.7

 

i) Demand Deposits

6,83,117

55,664

10.4

91,885

15.5

 

ii) Time Deposits

44,40,905

6,92,538

21.7

5,64,029

14.5

 

c) Other Deposits with RBI

4,588

-446

-9.1

155

3.5

IV.

Sources of M3 (a + b + c + d - e)

         

 

a) Net Bank Credit to the Government (i+ii)

17,41,985

4,43,256

44.7

3,08,028

21.5

 

i) Net Reserve Bank Credit to the Government

1,94,702

36,641

1,89,336

 

of which: to the Centre

1,93,452

37,037

1,88,046

 

ii) Other Banks’ Credit to the Government

15,47,284

4,06,615

39.8

1,18,692

8.3

 

b) Bank Credit to the Commercial Sector

37,20,942

2,95,084

10.4

5,94,353

19.0

 

c) Net Foreign Assets of the Banking Sector

13,24,951

-18,657

-1.4

-6,412

-0.5

 

d) Government’s Currency Liabilities to the Public

11,761

955

9.9

1,151

10.9

 

e) Net Non-Monetary Liabilities of the Banking Sector

8,37,517

-1,24,852

-14.6

1,08,843

14.9

*: Data pertain to October 22, 2010.
Note :
Data are provisional.

IV.4 With the persistence of deficit liquidity conditions, the Reserve Bank extended the liquidity-easing measures introduced in May 2010, i.e., allowing SCBs to avail additional liquidity support under the LAF to the extent of up to 0.5 per cent of their NDTL till mid-July and operation of second LAF (SLAF) on a daily basis till end-July 2010. The average daily liquidity injection under the LAF was around `47,000 crore during July 2010. In view of the evolving inflationary scenario, the repo and the reverse repo rates were raised by 50 basis points and 75 basis points, respectively, in two stages in July 2010 (Table IV.2).

1

IV.5 The liquidity conditions improved in August 2010, mainly on account of large pre-scheduled public debt redemptions towards end-July 2010, and the average daily net injection of liquidity declined to around `1,000 crore during the month. After a brief period of surplus liquidity (from end- August to early-September 2010), the liquidity conditions again switched to deficit mode as liquidity migrated to government balances with the Reserve Bank on account of quarterly advance tax payments.

IV.6 On the basis of the assessment of the macroeconomic situation, the Reserve Bank increased the repo rate and reverse repo rate by 25 basis points and 50 basis points, respectively, in the mid-quarter monetary policy review in September. The liquidity conditions remained in deficit mode in the second half of September 2010 as the cash balances of the centre started building-up, and the average daily net liquidity injection was around `24,000 crore during the month.The liquidity conditions tightened further in October 2010. In order to ease the frictional liquidity pressure, the Reserve Bank announced certain temporary measures,viz., conduct of SLAF on October 29 and November 1, 2010, conduct of a special two-day repo auction under LAF on October 30, 2010 and waiver of penal interest on shortfall in maintainance of SLR on October 30-31, 2010, to the extent of 1 per cent of NDTL for availing additional liquidity support under LAF.

Table IV.2 : Movements in Key Policy Rates in India

(Per cent)

Effective since

Reverse Repo Rate

Repo Rate

Cash Reserve Ratio

1

2

3

4

April 26, 2008

6.00

7.75

7.75 (+0.25)

May 10, 2008

6.00

7.75

8.00 (+0.25)

May 24, 2008

6.00

7.75

8.25 (+0.25)

June 12, 2008

6.00

8.00 (+0.25)

8.25

June 25, 2008

6.00

8.50 (+0.50)

8.25

July 5, 2008

6.00

8.50

8.50 (+0.25)

July 19, 2008

6.00

8.50

8.75 (+0.25)

July 30, 2008

6.00

9.00 (+0.50)

8.75

August 30, 2008

6.00

9.00

9.00 (+0.25)

October 11, 2008

6.00

9.00

6.50 (–2.50)

October 20, 2008

6.00

8.00 (–1.00)

6.50

October 25, 2008

6.00

8.00

6.00 (–0.50)

November 3, 2008

6.00

7.50 (–0.50)

6.00

November 8, 2008

6.00

7.50

5.50 (–0.50)

December 8, 2008

5.00 (-1.00)

6.50 (–1.00)

5.50

January 5, 2009

4.00 (-1.00)

5.50 (–1.00)

5.50

January 17, 2009

4.00

5.50

5.00 (–0.50)

March 4, 2009

3.50 (-0.50)

5.00 (-0.50)

5.00

April 21, 2009

3.25 (-0.25)

4.75 (-0.25)

5.00

February 13, 2010

3.25

4.75

5.50 (+0.50)

February 27, 2010

3.25

4.75

5.75 (+0.25)

March 19, 2010

3.50 (+0.25)

5.00 (+0.25)

5.75

April 20, 2010

3.75 (+0.25)

5.25 (+0.25)

5.75

April 24, 2010

3.75

5.25

6.00 (+0.25)

July 2, 2010

4.00 (+0.25)

5.50 (+0.25)

6.00

July 27, 2010

4.50 (+0.50)

5.75 (+0.25)

6.00

September 16, 2010

5.00 (+0.50)

6.00 (+0.25)

6.00

Note: 1. Reverse repo indicates absorption of liquidity and repo indicates injection of liquidity.
2. Figures in parentheses indicate change in policy rates in per cent.

IV.7 Despite surplus government balance and currency with the public operating as the major drains on liquidity during the second quarter of 2010-11, when compared with the situation prevailing at the end of the first quarter, variations in both currency and government surplus had a positive contribution to autonomous liquidity in the system (Table IV.3). The liquidity situation was managed primarily through LAF (Table IV.4).

Table IV.3 : Reserve Bank’s Liquidity Management Operations

(` crore)

Item

2009-10

2010-11

Q1

Q2

Q3

Q4

Q1

Q2

1

2

3

4

5

6

7

A.

Drivers of Liquidity (1+2+3+4)

-45,110

-44,514

-66,785

55,055

-1,05,124

26,981

 

1. RBI’s net Purchase from Authorised Dealers

-15,874

2,523

436

910

816

751

 

2. Currency with the Public

-18,690

-9,020

-43,224

-31,650

-58,420

241

 

3.a. Centre’s surplus balances with RBI

3,382

-67,938

-22,663

85,257

-58,249

10,953

 

3.b. WMA and OD

0

0

0

0

0

0

 

4. Others (residual)

-13,928

29,921

-1,334

538

10,729

15,036

B.

Management of Liquidity (5+6+7+8)

-21,674

62,376

89,870

1,618

67,255

-41,456

 

5. Liquidity impact of LAF

-1,30,020

25,390

86,330

18,795

75,785

-44,545

 

6. Liquidity impact of OMO* (net)

43,159

32,869

3,540

2,787

1,550

2,772

 

7. Liquidity impact of MSS

65,187

4,117

0

16,036

2,420

317

 

8. First round impact of CRR change

0

0

0

-36,000

-12,500

0

C.

Bank Reserves # (A+B)

-66,784

17,863

23,085

56,673

-37,869

-14,475

(+) : Injection of liquidity into the banking system.        (-) : Absorption of liquidity from the banking system.
* : Includes oil bonds but excludes purchases of government securities on behalf of State Governments.
# : Includes vault cash with banks and adjusted for first round liquidity impact due to CRR change.
Note: Data pertain to March 31 for Q4 and last Friday for all other quarters.


Table IV.4 : Liquidity Position

(` crore)

Outstanding as on Last Friday

LAF

MSS

Centre’s Surplus@

Total

1

2

3

4

5 = (2+3+4)

2009

       

April

1,08,430

70,216

-40,412

1,38,234

May

1,10,685

39,890

-6,114

1,44,461

June

1,31,505

22,890

12,837

1,67,232

July

1,39,690

21,063

26,440

1,87,193

August

1,53,795

18,773

45,127

2,17,695

September

1,06,115

18,773

80,775

2,05,663

October

84,450

18,773

69,391

1,72,614

November

94,070

18,773

58,460

1,71,303

December

19,785

18,773

1,03,438

1,41,996

2010

       

January

88,290

7,737

54,111

1,50,138

February

47,430

7,737

33,834

89,001

March*

990

2,737

18,182

21,909

April

35,720

2,737

-28,868

9,589

May

6,215

317

-7,531

-999

June

-74,795

317

76,431

1,953

July

1,775

0

16,688

18,463

August

11,815

0

20,054

31,869

September

-30,250

0

65,477

35,227

October**

-36,800

0

75,562

38,762

@ : Excludes minimum cash balances with the Reserve Bank in case of surplus.
* : Data pertain to March 31.
** : Data pertain to October 22.
Note: 1. Negative sign in column 2 indicates injection of liquidity through LAF.
2. Negative sign in column 4 indicates WMA /OD availed by the central government.

IV.8 There has been a significant reduction in the holdings of government securities by SCBs not only because of the higher growth of non-food credit, but also because banks tapped the repo window under the LAF for their liquidity needs, leading to gradual decline in SLR maintenance (Chart IV.2). The excess SLR investments of SCBs amounted to `1,86,097 crore in early October 2010 compared with `2,80,645 crore a year ago. With moderation in excess SLR, banks are making efforts to increase their deposit base as well as modulating the excess reserves maintained by them with the Reserve Bank.

2

Reserve Money

IV.9 Unlike the first quarter when the main component of increase in reserve money was currency in circulation, the reserve money growth in the second quarter was led by increase in banks’ deposits with Reserve Bank (Table IV.5). Banks’ deposits with the Reserve Bank increased in line with the increase in their net demand and time liabilities. On average, banks maintained excess reserves of `5,200 crore with the Reserve Bank during the quarter. Even though currency has shown strong y-o-y growth so far, the contraction during the quarter under review is consonant with the trend of subdued currency demand during the second quarter of the year (Chart IV.3).

Table IV.5 : Reserve Money - Variations

(` crore)

Item

2009-10

2010-11

Q1

Q2

Q3

Q4

Q1

Q2

1

2

3

4

5

6

7

Reserve Money

-38,926

16,216

51,816

1,38,583

15,125

3,370

Components (1+2+3)

           

1. Currency in Circulation

29,692

1,081

45,442

32,181

64,902

-4,005

2. Bankers’ Deposits with RBI

-72,664

20,680

5,456

1,07,552

-49,042

6,481

3. ‘Other’ Deposits with the RBI

4,046

-5,545

918

-1,150

-735

894

Sources (1+2+3+4-5)

           

1. RBI’s Net Credit to Government

-11,145

-14,953

51,428

1,24,676

15,796

-20,621

of which: to Centre

-11,497

-14,968

51,597

1,24,688

15,807

-20,586

2. RBI’s Credit to Banks and Commercial Sector

-9,623

-3,747

-5,926

-2,384

851

323

3. Net Foreign Assets of RBI

-16,750

50,120

-15,108

-66,428

14,613

53,422

4. Governments’ Currency Liabilities to the Public

254

302

309

351

355

137

5. Net Non-monetary Liabilities of RBI

1,662

15,506

-21,113

-82,369

16,491

29,890

Memo:

           

LAF - Repo (+) / Reverse Repo (-)

-1,32,800

28,170

67,765

37,360

39,375

-8,135

Net Open Market Sales *

-42,001

-31,591

-1,894

17

-8

20

Centre’s Surplus

-13,156

77,713

17,519

-80,112

37,405

9,890

MSS Balances

-65,187

-4,117

0

-16,036

-2,420

-317

*: Excludes Treasury Bills.
Note: 1. The sum of the memo items will not add up to the net Reserve Bank credit to the Centre as LAF and OMO transactions are at face value and also due to margin adjustment for LAF operations.
2. Data based on March 31 for Q4 and last reporting Friday for all other quarters.
3. Data are provisional.
4. Centre’s surplus includes government’s investment balance and cash balance with the Reserve Bank.


3

IV.10 On the sources side, the Reserve Bank’s credit to the Centre declined during the quarter, due to the combined effect of decline in the quantum of repo operations under the LAF1 as compared to the previous quarter and build up of government balances.

IV.11 The adjusted reserve money (base money adjusted for the first round impact of monetary policy actions of the Reserve Bank in the form of CRR changes) increased by 15.9 per cent (y-o-y) as on October 22, 2010 reflecting the impact of increase in currency in circulation (on the components side) and Reserve Bank credit to the government (on the sources side) (Chart IV.4).

4

Money Supply

IV.12 The deceleration in the growth of broad money (M3), that started in 2009-10, continued in the first quarter of 2010-11. Even though there was some revival in the growth rate of M3 during the second quarter, it still remained below the trajectory of 17 per cent indicated in the Monetary Policy Statement 2010-11 (Chart IV.5 a). The pattern of growth in M3 mainly tracked the behaviour of the major component of money stock, i.e., aggregate deposits (Chart IV.5 b).

5

IV.13 Since time deposits are the major constituent of aggregate deposits (around 87 per cent), a deceleration in these deposits is reflected in the aggregate deposits as well. A disaggregated analysis of the bank group-wise data suggests that the behaviour of time deposits replicates the deposit pattern of public sector banks, as they account for a predominant share of time deposits. Foreign banks witnessed a sharp deceleration in time deposit growth rate in the recent period, while the private sector banks have bucked the overall trend, with a sharp acceleration in their time deposits (Chart IV.6 a). Further analysis suggests that long-term time deposits (maturity more than one year) witnessed a sharper deceleration (Chart IV.6 b).

6
 
7

IV.14 The growth rate of time deposits has, however, shown a moderate pick-up since July 2010 in the wake of efforts made by banks for mobilisation of deposits. Also, there has been an increased inflow into small savings schemes since August 2009 as small savings have yielded higher returns than time deposits with banks since the beginning of 2009-10 (Chart IV.7). Total incremental inflows into small savings are, however, only a small fraction of monthly increases in time deposits.

IV.15 Given the low opportunity cost of holding money in an environment of high inflation and depressed deposit interest rates, the demand for currency exhibited acceleration in growth during recent period (Chart IV.8). The increase in currency with the public is also reflective of increased asset prices and payment under schemes such as the MGNREGA. The increase in the cash component of economic transactions indicates the need for furthering financial inclusion. The increased currency demand and hence the currency deposit ratio as well as the 100 basis points increase in the CRR since February 2010, led to some decline in the money multiplier during the first half of the year. Money growth, thus, remains subdued relative to the higher rate of increase seen in reserve money.

8

IV.16 On a quarterly basis, the bulk of the increase in money stock during the second quarter of 2010-11 was owing to an increase in time deposits. (Table IV.6). Given the excess liquidity that prevailed in the system till end-May 2010, banks were not actively mobilising deposits. The transmission of the monetary tightening measures initiated by the Reserve Bank since February 2010 to the deposit interest rates has started to become visible only since July 2010 (Chapter V, Table V.7).

IV.17 As regards sources of M3, the increase in money supply during the second quarter came mainly from banking system’s credit to the commercial sector. There was a major pick-up in the growth of non-food credit extended by SCBs during the first quarter of 2010-11 as telecom companies raised credit to pay for the 3G and wireless access spectrums (Chart IV.9 a). Credit flow during the second quarter has shown a slight moderation but largely remained above or close to the indicative trajectory of 20 per cent growth set out in the First Quarter Review of Monetary Policy (July 2010). Reflecting this moderation, as well as the improved deposit mobilisation since July 2010, the incremental non-food credit deposit ratio of SCBs fell below the peak of over 100 per cent attained towards the end of the first quarter and the beginning of the second quarter (Chart IV.9 b).

Table IV.6 : Monetary Aggregates - Variations

(` crore)

Item

2009-10

2010-11

Q1

Q2

Q3

Q4

Q1

Q2

1

2

3

4

5

6

7

M3

 (1+2+3 = 4+5+6+7-8)

1,63,787

1,61,970

1,24,777

3,54,416

86,103

1,86,330

 

Components

           

1.

Currency with the Public

24,913

2,797

45,086

29,787

64,416

-6,237

2.

Aggregate Deposits with Banks

1,34,829

1,64,717

78,773

3,22,778

22,421

1,91,672

 

2.1 Demand Deposits with Banks

-40,911

66,320

-26,343

1,34,985

-86,410

44,635

 

2.2 Time Deposits with Banks

1,75,739

98,397

1,05,116

1,90,793

1,08,831

1,47,037

3.

‘Other’ Deposits with RBI

4,046

-5,545

918

-1,150

-735

894

 

Sources

           

4.

Net Bank Credit to Government

1,20,816

71,703

35,598

1,61,646

47,024

36,930

 

4.1 RBI’s Net Credit to Government

-11,145

-14,953

51,428

1,24,676

15,796

-20,621

 

4.2 Other Banks’ Credit to Government

1,31,961

86,656

-15,830

36,970

31,228

57,551

5.

Bank Credit to the Commercial Sector

-7,232

1,07,136

68,093

3,09,890

68,700

1,11,980

6.

NFA of Banking Sector

-37,923

47,908

-20,701

-59,998

6,967

53,422

7.

Government’s Currency Liabilities to the Public

254

302

309

351

355

137

8.

Net Non-monetary Liabilities of the Banking Sector

-87,872

65,079

-41,478

57,472

36,943

16,139

Note: Data are provisional.


9

IV.18 The momentum in credit growth was seen across all bank groups, with private banks showing the highest growth rate at the beginning of the third quarter of 2010-11 (Table IV.7). Public sector banks accounted for 74 per cent of the incremental credit off take on a year-onyear basis as at the beginning of October 2010. Though the pace of deposit growth for SCBs as a whole remains lower than last year, banks have increased their borrowings from overseas as well as from financial institutions. These alternative funds have supported a higher credit growth, as investment in government and other approved securities, non-SLR securities as well as foreign currency assets has exhibited deceleration or contraction in y-o-y growth (Table IV.8).

IV.19 Data on sectoral deployment of gross bank credit show significant improvement in credit flow to industry, services and personal loans during the current financial year, while credit to agriculture has declined further (Table IV.9). A look at the disaggregated data, however, suggests that the credit flow to industry is not yet broad-based as the growth is mainly driven by flow of credit to the infrastructure sub-sector, iron and steel, chemicals and chemical products, other metal and metal products and engineering industries.

Table IV.7 : Credit Flow from Scheduled Commercial Banks

(Amount in ` crore)

Item

Outstanding as on October 8, 2010

Variation (Y-o-Y)

As on October 9, 2009

As on October 8, 2010

Amount

Per cent

Amount

Per cent

1

2

3

4

5

6

1. Public Sector Banks

25,67,838

2,83,483

15.2

4,24,171

19.8

2. Foreign Banks

1,75,580

-29,770

-15.9

17,979

11.4

3. Private Banks

6,39,361

12,076

2.4

1,24,213

24.1

4. All Scheduled Commercial Banks*

34,68,999

2,79,305

10.7

5,80,005

20.1

*: including Regional Rural Banks.
Note: Data are provisional.


Table IV.8: Select Sources and Uses of Funds of SCBs

(Amount in ` crore)

Item

Outstanding as on October 8, 2010

Variation (Y-o-Y)

As on October 9, 2009

As on October 8, 2010

Amount

Per cent

Amount

Per cent

1

2

3

4

5

6

Sources of Funds

 

 

 

 

 

1. Aggregate Deposits

47,88,309

6,94,231

20.0

6,25,710

15.0

2. Call/Term Funding from Financial Institutions

1,19,336

-18,121

-15.6

20,996

21.3

3. Overseas Foreign Currency Borrowings

41,342

-34,583

-55.5

13,637

49.2

4. Capital

65,965

13,809

30.3

6,649

11.2

5. Reserves

3,69,068

48,836

17.4

39,603

12.0

Uses of Funds

         

1. Bank Credit

34,68,999

2,79,306

10.7

5,80,004

20.1

of which: Non-food Credit

34,19,245

2,85,480

11.1

5,72,971

20.1

2. Investments in Government and

14,75,697

3,87,549

39.6

1,10,264

8.1

Other Approved Securities

         

a) Investments in Government Securities

14,70,231

3,92,145

40.6

1,12,680

8.3

b) Investments in Other

5,466

-4,595

-36.8

-2,417

-30.7

Approved Securities

         

3. Investments in non-SLR Securities

2,65,729

1,37,765

91.4

-22,823

-7.9

4. Foreign Currency Assets

66,656

19,397

84.8

24,373

57.6

5. Balances with the RBI

2,75,559

-1,29,595

-40.7

86,832

46.0

Note: Data are provisional. The sources and uses of funds will not match as the list is not exhaustive
and excludes the assets and liabilities within the banking system.

IV.20 Overall flow of resources from the financial sector to the commercial sector increased significantly in the first half of 2010-11 relative to the flows in the corresponding period of last year (Table IV.10). While domestic non-bank sources of funds declined compared to the corresponding period last year, funding from foreign sources increased on account of higher amounts raised in the form of short-term credit and through ECBs and ADRs/GDRs. Reflecting the pick-up in demand for credit, incremental non-food credit (adjusted) exceeded the flows from non-banking sources.

IV.21 Overall, the liquidity conditions have changed consistent with the objective of calibrated normalisation of monetary policy. Net liquidity switched to deficit mode towards the end of May 2010 after eighteen months of surplus, and has largely remained so since then. Reflecting the strengthening demand for finance consistent with robust economic growth, credit growth has picked up. Even though broad money growth remains below the trajectory envisaged in the Monetary Policy Statement for 2010-11, there has been an improvement since July 2010. With banks expected to scale up their deposit mobilisation to meet the demand for credit, broad money growth could be expected to rise. With liquidity in deficit mode and as deposit and lending rates start to move up further with some lag, the transmission of monetary policy could further strengthen.

Table IV.9: Deployment of Gross Bank Credit by Major Sectors (Revised)

(Amount in ` crore)

Sector

Outstanding
as on September 24, 2010

Variation (financial year so far)

September 25, 2009

September 24, 2010

Absolute

Per cent

Absolute

Per cent

1

2

3

4

5

6

Non-Food Gross Bank Credit (1 to 4)

31,99,151

92,341

3.5

 1,62,206

5.3

1. Agriculture and Allied Activities

4,01,933

- 1,760

-0.5

 -13,481

-3.2

2. Industry

14,17,200

84,982

8.1

 1,07,386

8.2

3. Personal Loans

6,15,195

 3,836

0.7

29,170

5.0

Housing

3,17,150

 7,891

2.8

16,195

5.4

Advances against Fixed Deposits

51,379

- 3,473

-7.1

2,771

5.7

Credit Card Outstanding

18,509

- 3,754

-13.4

-1,478

-7.4

Education

 40,944

 4,557

15.9

 4,060

11.0

Consumer Durables

9,083

- 112

-1.4

800

9.7

4. Services

 7,64,823

5,281

0.8

39,130

5.4

Transport Operators

53,876

- 128

-0.3

 1,229

2.3

Professional Services

53,370

 658

1.5

 4,859

10.0

Trade

1,70,606

 9,884

6.8

 8,279

5.1

Commercial Real Estate

1,01,662

 1,766

1.9

 9,604

10.4

Non-Banking Financial Companies

1,25,667

 7,192

7.3

 7,746

6.6

Memo

Priority Sector

11,20,343

 8,320

0.9

11,150

1.0

Micro and Small Enterprises

3,94,604

20,808

6.7

19,343

5.2

Industry

 

 

 

 

 

Food Processing

68,153

 327

0.6

 2,896

4.4

Textiles

1,23,764

 3,525

3.4

 2,364

1.9

Paper and Paper Products

 19,969

203

1.3

933

4.9

Petroleum, Coal Products and Nuclear Fuels

57,098

2,590

3.8

-20,556

-26.5

Chemicals and Chemical Products

88,348

 1,093

1.4

 3,431

4.0

Rubber, Plastic and their Products

 18,417

 536

3.9

 2,741

17.5

Iron and Steel

1,37,588

14,375

14.5

9,956

7.8

Other Metal and Metal Products

 38,719

2,214

7.5

3,047

8.5

Engineering

 82,987

- 893

-1.4

 9,090

12.3

Vehicles, Vehicle Parts and Transport Equipments

40,915

 1,818

5.2

 2,166

5.6

Gems and Jewellery

33,962

 1,997

7.0

 2,182

6.9

Construction

 42,661

- 592

-1.5

 -1,074

-2.5

Infrastructure

 4,69,621

48,659

18.0

87,499

22.9

Note: 1. Data are provisional and relate to select banks, which account for 95 per cent of total non-food credit extended by all SCBs.
2. Data include the effects of mergers of Bank of Rajasthan with ICICI Bank and State Bank of Indore with State
Bank of India.


Table IV.10 : Flow of Financial Resources to the Commercial Sector

(` crore)

Item

April-March

April-September

2008-09

2009-10

2009-10

2010-11

1

2

3

4

5

A. Adjusted Non-food Bank Credit (NFC)

4,21,091

4,80,258

1,06,575

2,55,674

i) Non-food Credit

4,11,824

4,66,960

1,16,935

2,22,946$

ii) Non-SLR Investment by SCBs

9,267

13,298

-10,360

32,728$

B. Flow from Non-banks (B1+B2)

4,39,926

5,80,821

2,22,780

2,29,519

B1. Domestic Sources

2,58,132

3,64,989

1,45,829

1,30,141

1. Public issues by non-financial entities

14,205

31,956

13,617

10,448

2. Gross private placements by non-financial entities

77,856

1,41,964

39,420

19,702 #

3. Net issuance of CPs subscribed to by non-banks

4,936

25,835

50,999

32,812 *

4. Net credit by housing finance companies

25,876

28,485

3,581

7,519^

5. Total gross accommodation by the four RBI regulated AIFIs - NABARD, NHB, SIDBI and EXIM Bank

31,408

33,871

-3,332

15,300

6. Systemically important non-deposit taking NBFCs (net of bank credit)

42,277

60,663

18,064

30,935^

7. LIC’s gross investment in corporate debt, infrastructure and social sector

61,574

42,215

23,480

13,425 ^

 B2. Foreign Sources

1,81,794

2,15,832

76,950

99,379

1. ECBs/FCCBs

31,350

14,356

 3,991

25,525^

2. ADR/GDR issues excluding banks and financial institutions

4,788

15,124

4,881

6,660

3. Short-term credit from abroad

-12,972

35,170

-7,137

25,455#

4. FDI to India

1,58,628

1,51,182

75,215

41,739^

C. Total Flow of Resources (A+B)

8,61,017

10,61,079

3,29,355

4,85,193

Memo Item:

       

Net resource mobilisation by Mutual Funds through Debt (non-Gilt) Schemes

-32,168

96,578

1,01,956

-3,266

$: Up to October 8, 2010.        #: April-June.           ^: April-August.        *: Up to September 15, 2010.


1 The Reserve Bank's credit to the Centre is affected by LAF operations, OMO, MSS balances and government's cash surplus with the Reserve Bank. Increase in repo/OMO purchases and decline in reverse repo/MSS balances/Government's surplus balances with Reserve Bank lead to increase in net Reserve Bank credit to the Centre, and vice versa.

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