I. Monetary Statistics

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சொத்து வெளியீட்டாளர்

வெளியிடப்பட்ட தேதி ஆகஸ்ட் 01, 2007

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The Reserve Bank of India has a long tradition of compilation and dissemination of monetary statistics, since July 1935. In view of the ongoing changes in the Indian economy as well as the developments in monetary sector, working groups were set up periodically to review and refine the monetary aggregates. Three working groups were set up so far, viz., the First Working Group on Money Supply (FWG) (1961), the Second Working Group (SWG) (1977) and the “Working Group on Money Supply: Analytics and Methodology of Compilation” (WGMS) (Chairman: Dr. Y.V. Reddy) (1998). Monetary statistics at present are compiled on a balance sheet framework with data drawn from the banking sector and postal authorities. The rationale and analytical foundations behind the compilation of monetary aggregates have been provided to the public through various reports, especially through the reports of the various working groups. Monetary aggregates are published on a regular basis in most of the major publications of RBI, such as Bank’s Annual Report, Report on Currency and Finance, Handbook of Statistics, RBI Bulletin, Weekly Statistical Supplement, etc.

There is no unique definition of ‘money’, either as a concept in economic theory or as measured in practice. Money is a means of payment and thus a lubricant that facilitates exchange. Money also acts as a store of value and a unit of account. In the real world, however, money provides monetary services along with tangible remuneration. It is for this reason that money has to have relationship with the activities that economic entities pursue. Money can, therefore, be defined for policy purposes as the set of liquid financial assets, the variation in the stock of which could impact on aggregate economic activity. As a statistical concept, money could include certain liquid liabilities of a particular set of financial intermediaries or other issuers. Thus, like other countries, a range of monetary and liquidity measures are compiled in India.

1.2. CONCEPTS AND DEFINITIONS
Various monetary and liquidity aggregates are compiled in India and their definitions are setout Table 1.
Table 1.1: Measures of Monetary and
Liquidity Aggregates
Reserve Money		=	Currency in circulation +
			Bankers’ deposits with the RBI
			+ ‘Other’ deposits with the RBI
		=	Net RBI credit to the
			Government + RBI credit to the
			commercial sector + RBI’s
			claims on banks + RBI’s net
			foreign assets + Government’s
			currency liabilities to the public
			– RBI’s net non-monetary
			liabilities
		=	Currency with the public +
M1
			Demand deposits with the
			banking system + ‘Other’
			deposits with the RBI.
		=	+ Savings deposits of post
M2			M1
			office savings banks
		=
M3			M1+ Time deposits with the
			banking system
		=	Net bank credit to the
			Government + Bank credit to
			the commercial sector + Net
			foreign exchange assets of the
			banking sector + Government’s
			currency liabilities to the public
			– Net non-monetary liabilities
			of the banking sector
		=	+ All deposits with post
M4			M3
			office savings banks (excluding
			National Savings Certificates).
		=	Currency with the public +
NM	1
			Demand deposits with the
			banking system + ‘Other’
			deposits with the RBI.
		=	+ Short-term time deposits
NM	2		NM1
			of residents (including and up
			to the contractual maturity of
			one year).
		=	+ Long-term time deposits
NM	3		NM2
			of residents + Call/Term
			funding from financial
			institutions.

*Manual on Financial and Banking Statistics*
	=	+ All deposits with the
L1		NM3
		post office savings banks
		(excluding National Savings
		Certificates).
	=	+Term deposits with term
L2		L1
		lending institutions and
		refinancing institutions (FIs) +
		Term borrowing by FIs +
		Certificates of deposit issued by
		FIs.
	=	+ Public deposits of non-
L3		L2
		banking financial companies.
Net bank credit	=	Net RBI credit to the
to the		Government (i.e., Net RBI
Government		Credit to the Centre + Net RBI
		Credit to State Governments) +
		Other banks’ credit to the
		Government

Bank credit to	=	RBI credit to the commercial
the commercial		sector + Other banks’ credit to
sector		the commercial sector
Net foreign	=	RBI’s net foreign assets +
assets of the		Other banks’ foreign assets
banking sector
Net non-	=	RBI’s net non-monetary
monetary		liabilities + Net non-monetary
liabilities of the		liabilities of other banks.
banking sector

Various components of monetary and liquidity aggregates are further set out below:

Currency in circulation’ includes notes in circulation, rupee coins and small coins. Rupee coins and small coins in the balance sheet of the Reserve Bank of India include ten-rupee coins issued since October 1969, two rupee-coins issued since November 1982 and five rupee coins issued since November 1985. Currency with the public is arrived at after deducting cash with banks from total currency in circulation, as reported by RBI.

‘Bankers’ deposits with the Reserve Bank’ represent balances maintained by banks in the current account with the Reserve Bank mainly for maintaining Cash Reserve Ratio (CRR) and as working funds for clearing adjustments. ‘Other’ Deposits with the Reserve Bank, for the purpose of monetary compilation, include deposits from foreign central banks, multilateral institutions, financial institutions and sundry deposits net of IMF Account No.1. ‘Net Reserve Bank credit to Government’ includes the Reserve Bank’s credit to Central as well as State Governments. It includes ways and means advances and overdrafts to the Governments, the Reserve Bank’s holdings of Government securities, and the Reserve Bank’s holdings of rupee coins less deposits of the concerned Government with the Reserve Bank. The Reserve Bank’s claims on banks include loans to the banks including NABARD. In case of the new monetary aggregates, the RBI’s refinance to the NABARD, which was earlier part of RBI’s claims on banks, has been classified as part of RBI credit to commercial sector. The ‘Reserve Bank’s credit to the commercial sector’ represents investments in bonds/shares of financial institutions, loans to them and holdings of internal bills purchased and discounted. ‘Government’s currency liabilities to the public’ comprise rupee coins and small coins.

he Reserve Banks net foreign assets are its holdings of foreign currency assets and gold. The gold reserves of Issue Department of the Reserve Bank were valued at Rs. 21.24 per tola till October 5, 1956; thereafter, at Rs. 62.50 per tola till January 31, 1969 and subsequently at Rs. 98.44 per tola (Rs.84.39 per 10 gms) up to October 16, 1990. From October 17, 1990 gold is valued at the end of the month at 90 per cent of the daily average price quoted at London for the month. The rupee equivalent is determined on the basis of exchange rate prevailing on the last business day of the month. Unrealised gains/ losses are adjusted to the Currency and Gold Revaluation Account (CGRA). The Reserve Bank’s net foreign exchange assets take into account the impact of appreciation in the value of gold following its revaluation close to international market price effective October 17, 1990. Such appreciation has a corresponding effect on Reserve Bank’s net non-monetary liabilities.

Other liabilities of the Reserve Bank’ include internal reserves and provisions of the Reserve Bank such as Exchange Equalisation Account (EEA), Currency and Gold Revaluation Account (CGRA), Contingency Reserve and Asset Development Reserve. The reserves, viz., Contingency Reserve, Asset Development Reserve, CGRA and EEA reflected in ‘Other Liabilities’ are in addition to the ‘Reserve Fund’ of Rs.6,500 crore held by the Reserve Bank as a distinct balance sheet head. Gains/losses on valuation of foreign currency assets and gold due to movements in the exchange rates and/or prices of gold are not taken to Profit and Loss Account but instead booked under a balance sheet head named as CGRA. The balance represents accumulated net gain on valuation of foreign currency assets and gold. CGRA was earlier known as Exchange Fluctuation Reserve (EFR). The balance in EEA represents provision made for exchange losses arising out of forward commitments. Contingency Reserve represents the amount set aside on a year-to-year basis for meeting unexpected and unforeseen contingencies including depreciation in value of securities, exchange guarantees and risks arising out of monetary/ exchange rate policy compulsions. In order to meet the internal capital expenditure and make investments in subsidiaries and associate institutions, a further specified sum is provided and credited to the Asset Development Reserve.

Net non-monetary liabilities (NNML) of the Reserve Bank’ are liabilities which do not have any monetary impact. These comprise items such as the Reserve Bank’s paid-up capital and reserves, contribution to National Funds (NIC-LTO Fund and NHC-LTO Fund), RBI employees’ PF and superannuation funds, bills payable, compulsory deposits with the RBI, RBI’s profit held temporarily under other deposits, amount held in state Governments Loan Accounts under other deposits, IMF quota subscription and other payments and other liabilities of RBI less net other assets of the RBI. Similarly, NNML of banks include items such as their capital, reserves, provisions, etc. NNML of the banking sector includes NNML of the Reserve Bank and that of other banks.

Currency with the public’ is currency in circulation less cash held by banks. ‘Demand deposits’ include all liabilities which are payable on demand and they include current deposits, demand liabilities portion of savings bank deposits, margins held against letters of credit/ guarantees, balances in overdue fixed deposits, cash certificates and cumulative/ recurring deposits, outstanding Telegraphic Transfers (TTs), Mail Transfers (MTs), Demand Drafts (DDs), unclaimed deposits, credit balances in the Cash Credit account and deposits held as security for advances which are payable on demand. Money at Call and Short Notice from outside the Banking System is shown against liability to others.

‘Time deposits’ are those which are payable otherwise than on demand and they include fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank deposits, staff security deposits, margin money held against letters of credit if not payable on demand, India Millennium Deposits and Gold Deposits.

‘Net bank credit to Government’ comprise the RBI’s net credit to Central and State Governments and commercial and co-operative banks’ investments in Central and State Government securities. ‘Bank credit to commercial sector’ include RBI’s and other bank’s credit to commercial sector. Other banks’ credit to commercial sector includes banks’ loans and advances to the commercial sector (including scheduled commercial banks’ food credit) and banks’ investments in “other approved” securities.
The acronyms and are used to NM1, NM2 NM3 distinguish the new monetary aggregates [as proposed by the Working Group on Money Supply: Analytics and Methodology of Compilation (WGMS) (Chairman: Dr. Y.V. Reddy), June 1998] from the existing monetary aggregates. and are based on the NM2 NM3 residency concept and hence do not directly reckon non-resident foreign currency repatriable fixed deposits in the form of FCNR(B) deposits, Resurgent India Bonds (RIBs) and India Millennium Deposits (IMDs). Residency essentially relates to the country in which the holder has a centre of economic interest. Currency and deposits held by the non-residents in the rest of the world sector would be related to balance of payments considerations such as international capital flows rather than to the domestic demand for monetary assets or to the use of money in domestic transactions. While there is a need to categorise deposit liabilities by residency, it may not be appropriate to exclude all categories of non-resident deposits from domestic monetary aggregates as nonresident rupee deposits are essentially integrated into the domestic financial system. Therefore, only non-resident repatriable foreign currency fixed deposits are excluded from deposit liabilities and treated as external liabilities. Accordingly, from among the various categories of nonresident deposits, FCNR(B), Resurgent India Bonds (RIBs), and India Millennium Deposits (IMDs) were classified as external liabilities and excluded from the domestic money stock. Other major features of the new monetary and liquidity aggregates are as follows:

1.Compilation of four measures of monetary aggregates, and three measures of liquidity aggregates besides a comprehensive financial sector survey. NM0 is essentially the monetary base, compiled mainly from the balance sheet of the Reserve Bank of India; purely reflects the non-interest NM1 bearing monetary liabilities of the banking sector; includes besides currency and NM2 current deposits, saving and short-term deposits reflecting the transactions balances of entities. was redefined to reflect NM3 the call funding that the additionally to NM2 banking system obtains from other financial institutions

2. Bank credit is often specifically referred, in monetary economics, as a critical variable affecting consumption and capital formation in a direct manner. As such it is often regarded as a more useful indicator of real sector activity than money supply. In India, one of the objectives of monetary policy is clearly stated in official documents as one of ensuring adequate flow of credit to the productive sectors of the economy. While credit to government from the banking system is clearly identified, bank credit to the commercial sector, includes only advances in the form of loans, cash credit, overdrafts, bills purchased and discounted, and investments in approved securities other than government securities. However, commercial banks have in recent years been investing in securities such as commercial paper, shares and debentures issues by the commercial sector, which are not reflected in the conventional credit aggregates. The definition of bank credit has been broadened to include such investments.

3. Net foreign exchange assets (NFA) of the banking sector comprise the RBI’s net foreign exchange assets and the net foreign currency assets of the banking system. Net foreign currency assets of the banking system comprise their holdings of foreign currency assets net of i) their holdings of non-resident repatriable foreign currency fixed deposits which is presently defined to include FCNR(B) deposits and ii) overseas foreign currency borrowings.

4. In the new monetary aggregate NM3, capital account consists of paid-up capital and reserves. ‘Other Items (net)’ is the residual, balancing the components and sources of the monetary and banking accounts and includes other demand and time liabilities, net inter-bank liabilities, etc., as applicable.

1.3 COVERAGE

At present monetary aggregates are compiled based on the data from the scheduled commercial banks, cooperative banks, urban cooperative banks and the post offices. The coverage of co-operative banks has increased over time (Table 1.2). As regards co-operative banks, data up to February 1970 include State cooperative banks, while the data from March 1970 onwards are inclusive of central co-operative banks and primary co-operative banks.

1.3.1 Changes in the Compilation

There was a change in the treatment of apportionment of savings deposits into its two components - demand and time in March 1978. Savings bank accounts are bifurcated into demand and time portions depending on whether interest is actually paid on such deposits. Banks are required to report such classification on the basis of the position as at close of business at September 30 and March 31 instead of as at end-June and as at end-December as done hitherto.

The evolution of methodology of compilation of monetary aggregates in India has been encapsulated in the table appended below (Table 1.2).

Table 1.2: Money Stock Measures: Evolution of Methodology of Compilation
First Working Group(FWG) (1961)	Second Working Group(SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
Components (C)
C.I. Currency with the	C.I. Currency with the	C.I. Currency with the
Public (C.I.1+C.I.2-C.I.3-	Public (C.I.1+C.I.2-C.I.3-	Public (C.I.1+C.I.2-C.I.3)
C.I.4-C.I.5)	C.I.4)
C.I.1 Notes in circulation	C.I.1 Notes in circulation	C.I.1 Notes in circulation
C.I.2 Circulation of Rupee	C.I.2 Circulation of	C.I.2 Circulation of	Comprise rupee coins and
coins and small coins i.e.,	Rupee coins and small	Rupee coins and small	small coins. Ten-rupee
Government’s currency	coins i.e., Government’s	coins i.e., Government’s	coins issued since
liabilities to the Public	currency liabilities to the	currency liabilities to the	October 1969, two rupee-
	Public	Public	coins issued since
			November 1982 and five
			rupee coins issued since
			November 1985 are
			included under rupee
			coins. Net of return of
			Indian notes from
			Pakistan.
C.I.3 Currency returned	C.I.3 Currency returned
by Pakistan	by Pakistan
C.I.4 Cash in hand with	C.I.4 Cash in hand with	C.I.3 Cash in hand with	The FWG considered only
banks i.e., commercial	the banking system i.e.,	the banking system	commercial and state co-
banks and state co-	commercial banks, state		operative banks while the
operative banks	co-operative banks,		SWG extended the
	central co-operative		coverage to central co-
	banks and primary co-		operative banks and
	operative banks		primary co-operative
			banks consisting of urban
			co-operative banks and
			salary earners’ societies.
C.I.5 Balance of the			Since August 1967,
Central and State			balances held at
Governments held at			treasures have not been
treasuries			included in the measure
			in view of their meagre
			amounts.
C.II. Aggregate Deposits	C.II. Aggregate Deposits	C.II. Aggregate Deposits	With the inclusion of
with Banks (C.II.1+C.II.2)	with the Banking System	held by Residents with	central and urban co-
	(C.II.1+C.II.2)	the Banking System	operative banks, the SWG
		(CII.1+C.II.2-C.II.2.2.1-	treated inter-bank
		C.II.2.3.1)	deposits with the banking
			system as part of net
			non-monetary liabilities
			[i.e., other items (net) as
			defined by the Working
			Group on Money Supply

First Working Group(FWG) (1961)	Second Working Group(SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
			(WGMS): Analytics and
			Methodology Compilation.
			The WGMS recommended
			that aggregate deposits
			should be on residency
			basis, thereby excluding
			repatriable foreign
			currency fixed deposits
			held by non-residents,
			e.g., FCNR(B) deposits,
			from money supply.
C.II.1 Demand Deposits	C.II.1 Demand Deposits	C.II.1 Demand Deposits
with banks (including	with the banking system.	with the banking system.
inter-bank demand
deposits with state co-
operative banks)
C.II.2 Time Deposits with	C.II.2 Time Deposits with	C.II.2 Time Deposits held	The WGMS recommended
banks (including inter-	the banking system.	by Residents with the	a break-up of time
bank time deposits with		banking system.	deposits into CDs and
state co-operative banks)		(CII.2.1+C.II.2.2+	other time deposits on
		C.II.2.3)	the basis of maturity
			structure partitioned at
		C.II.2.1 Certificates of	one year.
		Deposit (CDs)
		C.II.2.2 Short-term1 time
		deposits
		Currency Repatriable
		Deposits held by Non-
		deposits
		C.II.2.3.1 Foreign
		Currency Repatriable
		Deposits held by Non-
		Residents
		C.II.3 Savings Accounts
		C.II.3.1 Time Liabilities
		portion of Savings
		Accounts
	C.III. ‘Other’ deposits	C.III. ‘Other’ deposits with
	with the RBI (C.III.1-	the RBI (C.III.1-C.III.2-
C.III.1 Other Deposits	C.III.1 Other Deposits	C.III.1 Other Deposits
with the RBI	with the RBI	with the RBI

First Working Group (FWG) (1961)	Second Working Group (SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
C.III.2 IMF Deposits with	C.III.2 IMF Deposits with	C.III.2 IMF Deposits with
RBI in Account No.1 *	RBI in Account No.1 *	RBI in Account No.1 *
	C.III.3 RBI Employees’	C.III.3 RBI Employees’	Balances under Reserve
	Pension/ Provident/Co-	Pension/ Provident/Co-	Bank Employees’
	operative Guarantee	operative Guarantee	Pension/Provident and
	Funds	Funds	Co-operative Guarantee
			Funds have been
			excluded from money
			supply since January
			1964.
	C.III.4 Compulsory	C.III.4 Compulsory	Balances under
	Deposits with RBI	Deposits with RBI	Additional Emoluments
			(Compulsory Deposits)
			Act 1974 and the
			Compulsory Deposit
			Scheme (Income Tax
			Payers) Act were excluded
			from money supply
			effective August 16, 1974
			and December 13, 1974,
			respectively.
	C.III.5 Profits of the RBI	C.III.5 Profits of the RBI
	held temporarily under	held temporarily under
	other deposits and	other deposits and
	subscriptions to state	subscriptions to state
	governments’ loans	governments’ loans
	pending allotment	pending allotment
	C.IV. Post Office Total	C.IV. Post Office Total	Post Office Deposits were
	Deposits	Deposits	included in the monetary
			aggregates by the SWG.
	C.IV.1 Post Office	C.IV.1 Post Office
			The WGMS recommended
	Savings Deposits	Savings Deposits
			that these should be part
			of liquidity aggregates.

		C.V. Call/Term Money	Borrowings represent
		Borrowings by Scheduled	money at call and short
		Commercial Banks from	notice obtained from
		non-bank sources	outside the banking
		(excluding PDs)	system, but exclude
			refinance from RBI and
			financial institutions.
C.IV. Money Supply with	C.V. Narrow Money	C.VI. Narrow Money	There is a break in the
the Public			M1 series following the
	(M1)(=C.I+C.II.1+C.III)	(M1)(=C.I+C.II.1+C.III)
(=C.I+C.II.1+C.III)			reclassification of
			demand and time

IMF Account No. 1

The IMF conducts its financial dealings with a member through the fiscal agency and the depository designated by the member. In addition, each member is required to designate its central bank as a depository for the IMF’s holding of the member’s currency, or if it has no central bank, a monetary agency or a commercial bank acceptable to IMF. Most members have designated their central banks as both the depository as well as the financial agency.

The depository maintains without any service charge or commission, two accounts that are used to record the IMF’s holdings of the member’s currency the IMF’s account no. 1 and IMF’s account no. 2 The no. 1 account is used for IMF transactions, including subscription payments, purchases and repurchases and repayment of resources borrowed by IMF.

First Working Group (FWG) (1961)	Second Working Group (SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
			components of savings
			accounts vide circular
			DBOD.No.Ref.BC.127/C-
			96(Ret)-77 dated October
			15, 1977.
	(=C.V.+C.IV.1)	(=C.VI +
	C.VI. M2	C.VII. M2
		C.II.2.1 + C.II.2.2-
		C.II.2.2.1+ C.II.3.1)
C.V. Aggregate Monetary			Data on aggregate
	C.VII. Broad Money (M3)	C.VIII. Broad Money (M3)
Resources (=C.IV+C.II.2)	(=C.V + C.II.2)	(=C.VII + C.II.2.3-	monetary resources
		C.II.2.3.1 + C.V)	proposed by the FWG
			were first published in
			the Bank’s Annual Report
			1964-65 and in the
			Report on Currency and
			Finance 1967-68.
	(=C.IV+C.VII.)
	C.VIII. M4
		(=C.IV+C.VIII)
		C.IX. L1
		C.X. Term Deposits of	Includes IDBI, ICICI,
		Financial Institutions	IFCI, IIBI, EXIM Bank,
		(FIs)	TFCI, NABARD, SIDBI
			and NHB
		C.XI. Certificates of
		Deposit issued by FIs.
		C.XII. Term Borrrowings
		by FIs.
		(=C.IX +C.X+
		C.XIII. L2
		C.XI +C.XII)
		C.XIV. Public Deposits	Includes NBFCs having
		by Non-Banking	public deposits of Rs. 20
		Financial Companies	crore or above
		(NBFCs)

		(=C.XIII +
		C.XV. L3
		C.XIV)
SOURCES (S)

S.I Net Bank Credit to	S.I Net Bank Credit to	S.I Net Bank Credit to
Government Sector	Government Sector	Government (S.I.1+S.I.2)
(S.I.1+S.I.2)	(S.I.1+S.I.2)
S.I.1 Net RBI Credit to	S.I.1 Net RBI Credit to	S.I.1 Net RBI Credit to
Government Sector	Government Sector	Government
(S.I.1.1 + S.I.1.2 + S.I.1.3+	(S.I.1.1+S.I.1.2)	(S.I.1.1+S.I.1.2)
S.I.1.4 + S.I.1.5-
S.I.1.6+S.I.1.7-S.I.1.8)
	S.I.1.1 Net RBI Credit to	S.I.1.1 Net RBI Credit to
	the Central Government	Central Government
	(S.I.1.1.1 + S.I.1.1.2 +	(S.I.1.1.1+S.I.1.1..2 +

First Working Group(FWG) (1961)	Second Working Group(SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
	S.I.1.1.3 + S.I.1.1.4 +	S.I.1.1.3 + S.I.1.1.4 +
	S.I.1.1.5 - S.I.1.1.6)	S.I.1.1.5-S.I.1.1.6)
S.I.1.1 Loans and	S.I.1.1.1 Loans and	S.I.1.1.1 Loans and
Advances to the Central	Advances to the Central	Advances to the Central
Government	Government	Government
S.I.1.2 Bills Purchased	S.I.1.1.2 Bills Purchased	S.I.1.1.2 Bills Purchased
and Discounted	and Discounted	and Discounted
S.I.1.3 Investments in	S.I.1.1.3 Investments in	S.I.1.1.3 Investments in
Treasury Bills	Treasury Bills	short-term1 Central
		Government securities
S.I.1.4 Investments in	S.I.1.1.4 Investments in	S.I.1.1.4 Investments in
Government of India	Central Government	long-term2 Central
Securities	Securities	Government Securities
S.I.1.5 Rupee coins held	S.I.1.1.5 Rupee coins	S.I.1.1.5 Rupee coins
by the RBI	held by the RBI	held by the RBI
S.I.1.6 Deposits of the	S.I.1.1.6 Deposits of the	S.I.1.1.6 Deposits of the
Central Government with	Central Government with	Central Government with
the RBI	the RBI	the RBI
	S.I.1.2 Net RBI credit to	S.I.1.2 Net RBI credit to
	the State Government	the State Government
	(S.I.1.2.1-S.1.2.2)	(S.I.1.2.1-S.I.1.2.2)
S.I.1.7 Loans and	S.I.1.2.1 Loans and	S.I.1.2.1 Loans and
Advances to State	Advances to State	Advances to State
Governments	Governments	Governments
S.I.1.8 Deposits of State	S.I.1.2.2 Deposits of	S.I.1.2.2 Deposits of
Governments	State Governments	State Governments
S.I.2 Other Banks’ credit	S.I.2 Other Banks’ credit	S.I.2 Credit to
to Government (S.I.2.1 +	to Government	Government by the
S.I.2.2)	(=S.I.2.1)	Banking System (S.I.2.1
		+ S.I.2.2)
S.I.2.1 Other Banks’	S.I.2.1 Other Banks’	S.I.2.1 Investments in	Treasury Bills are to be
investments in	investments in	short-term Government	valued at carrying cost.
Government securities	Government securities	securities by the
		Banking System

		S.I.2.2 Investments in
		long-term2 Government
		securities by the
		Banking System
S.I.2.2 Government’s			Government’s currency
Currency Liabilities to the			liabilities to the Public
Public adjusted for			were carved out as an
balances in treasuries			independent source of
			money stock in October
			1962.
S.II. Total Bank Credit to	S.II. Total Bank Credit to	S.II. Bank Credit to	The nomenclature
Private Sector	Commercial Sector	Commercial Sector	“private sector” was
(S.II.1+S.II.2)	(S.II.1+S.II.2)	(S.II.1+S.II.2)	changed into “commercial

First Working Group(FWG) (1961)	Second Working Group(SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
			sector” in 1970, as bank
			credit included credit
			given to commercial/
			manufacturing
			enterprises in the public
			sector too.
S.II.1 RBI Credit to	S.II.1 RBI Credit to	S.II.1 RBI Credit to
Private Sector	Commercial Sector	Commercial Sector
(S.II.1.1+S.II.1.2)	(S.II.1.1+S.II.1.2+S.II.1.3)	(S.II.1.1+S.II.1.2+S.II.1.3)
S.II.1.1 RBI’s investments	S.II.1.1 RBI’s	S.II.1.1 RBI’s
in shares/bonds of	investments in shares/	investments in shares/
financial institutions,	bonds of financial	bonds of financial
ordinary debentures of co-	institutions, ordinary	institutions, ordinary
operative sectors, Central	debentures of co-	debentures of co-
Land Mortgage Bank	operative sectors, CLMB	operative sectors, CLMB
(CLMB) debentures etc.	debentures etc.	debentures etc.
S.II.1.2 Loans to financial	S.II.1.2 Loans to	S.II.1.2 Loans to	On the establishment of
institutions	financial institutions	financial institutions	National Bank for
			Agriculture and Rural
			Development (NABARD)
			on July 12, 1982, certain
			assets and liabilities of
			the RBI were transferred
			to NABARD, necessitating
			some reclassification of
			aggregates on the sources
			side of money stock since
			that date. The WGMS
			recommended the
			reclassification of the
			RBI’s refinance to
			NABARD as credit to
			commercial sector rather
			than as claims on banks
			as had been the practice
			hitherto.
	S.II.1.3 Internal Bills	S.II.1.3 Internal Bills	With the introduction of
	(under Bills	(under Bills	the Bills Rediscounting
	Rediscounting Scheme)	Rediscounting Scheme)	Scheme, the commercial
			banks started discounting
			the internal bills with the
			RBI which have been
			included in the RBI credit
			to commercial sector
			since June 1971.
S.II.2 Other Banks’ net	S.II.2 Other Banks’	S.II.2 Credit to the
credit to Private Sector	credit to Commercial	Commercial Sector by
(S.II.2.1 + S.II.2.2-S.II.2.3	Sector (S.II.2.1 +	the Banking System
-S.II.2.4-S.II.2.5)	S.II.2.2)	(S.II.2.1 + S.II.2.2+
		S.II.2.3 + S.II.2.4)
S.II.2.1 Bank Credit	S.II.2.1 Bank Credit	S.II.2.1 Bank Credit	Includes loans, cash
			credit and overdrafts and
			internal and foreign bills
			purchased and

First Working Group(FWG) (1961)	Second Working Group(SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
			discounted of SCBs,
			RRBs.
S.II.2.2 Other	S.II.2.2 Other	S.II.2.2 Investments in
Investments	Investments	other Approved
		Securities
		S.II.2.3 Other	Include investments in
		Investments	securities which are not
			approved for maintenance
			of statutory liquidity ratio
			(SLR) such as
			Commercial Papers, units
			of UTI and mutual funds
			and shares/debentures/
			bonds of the public and
			private non-bank sector.
S.II.2.3. Net inter-bank			As data for central and
Liabilities			primary co-operative
			banks were not included
			in money supply, the
			FWG had adjusted bank
			credit for net inter-bank
			liabilities. These were,
			however, treated as part
			of net non-monetary
			liabilities by the SWG on
			extension of full coverage
			to the co-operative sector.
			The FWG had adjusted
S.II.2.4 Loans from
financial institutions			bank credit against loans

			from select financial
			institutions which
			received refinance from
			the RBI which had
			already been reckoned in
			the RBI credit to the
			commercial sector. The
			SWG did away with this
			adjustment as it was
			argued that these FIs had
			substantial access to
			sources of funds other
			than those from the RBI.
		S.II.2.4 Net lending to	Banks’ net lendings to
		Primary Dealers	PDs, net of their call
			borrowings from PDs, are
			part of net inter-bank
			assets under the present
			reporting format.
			However, as the banking
			sector in money supply
			excludes PDs, this item
			was included as part of
			credit from the banking
			system by the WGMS.

First Working Group(FWG) (1961)	Second Working Group(SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
S.II.2.5 Time deposits			This adjustment was
held by Banks (including			considered necessary
inter-bank time deposits			since the FWG was
held by state co-operative			concerned with M1. The
banks)			presentation of data on
			bank credit to
			commercial sector on net
			basis was changed into
			gross basis in May 1974,
			as (i) time deposits are
			used not only for
			financing bank credit to
			commercial sector but
			also for lending to the
			Government and (ii) these
			are not owned by
			commercial enterprises
			who largely borrow from
			banks.
S.III Net Foreign	S.III Net Foreign	S.III Net Foreign
Exchange Assets of the	Exchange Assets of the	Exchange Assets of the
Banking Sector	Banking Sector	Banking Sector
(S.III.1+S.III.2)	(S.III.1+S.III.2)	(S.III.1+S.III.2)
S.III.1 Net Foreign	S.III.1 Net Foreign	S.III.1 Net Foreign
Exchange Assets of the	Exchange Assets of the	Exchange Assets of the
RBI (S.III.1.1 + S.III.1.2 +	RBI (S.III.1.1 + S.III.1.2 +	RBI (S.III.1.1 + S.III.1.2-
S.III.1.3-S.III.1.4-S.III.1.5)	S.III.1.3-S.III.1.4-	S.III.1.3+S.III.1.4)
	S.III.1.5)
S.III.1.1 Gold Coin and	S.III.1.1 Gold Coin and	S.III.1.1 Gold Coin and	Inclusive of valuation of
Bullion	Bullion	Bullion	Gold following its
			revaluation close to
			international market
			price effective October 17,
			1990. Such revaluation
			has a corresponding
			effect on Reserve Bank’s
			net non-monetary
			liabilities (capital
			account)

		S.III.1.2 Foreign	Since July 1996, foreign
		Currency Assets of the	currency assets are being
		RBI(S.III.1.2.1+S.III.1.2.2)	valued at the exchange
			rate prevailing at the end
			of every week. Such
			revaluation has a
			corresponding effect on
			Reserve Bank’s net non-
			monetary liabilities
			(capital account).
	S.III.1.2 Foreign		Certain foreign securities
S.III.1.2 Foreign	Securities	S.III.1.2 Foreign
Securities		Securities	e.g., IBRD shares,
			Commonwealth bonds
			etc. which were part of
			RBI’s claims on

First Working Group FWG) (1961)	Second Working Group(SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
			Government were
			reclassified as part of its
			foreign assets by the
			SWG.
S.III.1.3 Balances held	S.III.1.3 Balances held	S.III.1.2.2 Balances held
abroad	abroad	abroad
S.III.1.4 IMF A/c No.1	S.III.1.4 IMF A/c No.1	S.III.1.3 IMF A/c No.1
S.III.1.5 Special Currency	S.III.1.5 Quota	S.III.1.4 Quota
withdrawn from Gulf	subscription in rupees.	subscription in rupees.
States held under Other
deposits of the RBI if any.
S.III.2 Net Foreign	S.III.2 Net Foreign	S.III.2 Net Foreign
Exchange Assets of	Exchange Assets of	Currency Assets of
Banking System	Banking System	Banking System(S.III.2.1-
	(Authorised Dealers’	S.III.2.2-S.III.2.3)
	Balances)
		S.III.2.1 Foreign	Includes balances held
		Currency Assets of the	abroad (i.e., the cash
		Banking System	component of nostro
			accounts, etc.) and
			investments in eligible
			foreign securities and
			bonds.
		S.III.2.2. Overseas
		Borrowings of the
		Banking System
		S.III.2.3 Non-Resident
		Repatriable Foreign
		Currency Fixed Deposits
		with the Banking System
		(C.II.2.2.1+C.II.2.3.1)
	S.IV. Government’s	S.IV. Government’s	Net of Indian currency
	Currency Liabilities to	Currency Liabilities to	returned by Pakistan
	the Public	the Public	awaiting adjustment.
S.IV. Net non-monetary	S.V. Net non-monetary	S.V. Capital Account of	The WGMS has
Liabilities of the Banking	Liabilities of the Banking	the Banking Sector	bifurcated the non-
Sector (S.IV.1+S.IV.2)	Sector (S.V.1+S.V.2)	(S.V.1+S.VI.2)	monetary liabilities of the
			banking sector into the
			capital account and other
			items (net).
S.IV.1 Net non-monetary	S.V.1 Net non-monetary	S.V.1 Capital Account of
Liabilities of the RBI	Liabilities of the RBI	the RBI (S.V.1.1 +
(S.IV.1.1 + S.IV.1.2 +	(S.V.1.1 + S.V.1.2 +	S.V.1.2 + S.V.1.3 +
S.IV.1.3 + S.IV.1.4 +	S.V.1.3 + S.V.1.4 +	S.V.1.4 + S.V.1.5 +
S.IV.1.5 - S.IV.1.6 +	S.V.1.5 + S.V.1.6 +	S.V.1.6)
S.IV.1.7)	S.V.1.7 + S.V.1.8 -
	S.V.1.9)
S.IV.1.1 Paid-up Capital	S.V.1.1 Paid-up Capital	S.V.1.1 Paid-up Capital
S.IV.1.2 Reserves	S.V.1.2 Reserves	S.V.1.2 Reserves

First Working Group(FWG) (1961)	Second Working Group(SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
S.IV.1.3 Contributions to	S.V.1.3 Contributions to	S.V.1.3 Contingency
National Funds	National Funds	Reserves
S.IV.1.4 Bills Payable	S.V.1.4 RBI Employees’	S.V.1.4 Exchange
	Pensions/ Provident/	Fluctuation Reserve /
	Guarantee Funds	Currency and Gold
		Revaluation Account
S.IV.1.5 Other Liabilities	S.V.1.5 Compulsory	S.V.1.5 Exchange
	Deposits with the RBI	Equalisation Account
S.IV.1.6 Other Assets net	S.V.1.6 Bills Payable	S.V.1.6 Contributions to
of Gold in Banking		National Funds
Department
S.IV.1.7 Indian currency	S.V.1.7 Other Libabilities
returned by Pakistan
awaiting adjustment	S.V.1.8 IMF Quota
	Subscription and other
	payments in rupees
	included in IMF A/c No.1
	S.V.1.9 Other Assets net
	of Gold in Banking
	department
		S.V.2 Capital Account of
		the Banking System
		(S.V.2.1+S.V.2.2)S.V.2.1
		Paid-up Capital S.V.2.2
		Reserves
S.IV.2 Non-identifiable	S.V.2 Net non-monetary	S.VI. Other items (net) of
net non-monetary	liabilities of the Banking	the Banking Sector
liabilities of other Banks	System (residual)	(S.VI.1 + S.VI.2)
(residual)
		S.VI.1 Other items (net)
		of the RBI (S.VI.1.1 +
		S.VI.1.2 + S.VI.1.3+
		S.VI.1.4 - S.VI.1.5-
		S.VI.1.6 - S.VI.1.7+
		S.VI.1.8- S.VI.1.9)
		S.VI.1.1 RBI Employees’
		Pensions/ Provdent/
		Guarantee Funds
		S.VI.1.2 Compulsory
		Deposits with the
		RBIS.VI.1.3 Bills Payable
		S.VI.1.4 Other Liabilities
			Excludes contingency
			reserve, exchange
			fluctuation reserve and
			exchange equalization
			account which now form
			part of capital account
			and are, therefore,
			adjusted.

First Working Group (FWG) (1961)	Second Working Group (SWG) (1977)	Working Group on Money Supply (WGMS) (1998)	REMARKS
1	2	3	4
		S.VI.1.5 Contingency
		ReservesS.VI.1.6
		Exchange Fluctuation
		Reserve / Currency and
		Gold Revaluation
		Account
		S.VI. 1.7 Exchange
		Equalisation Account
		S.VI.1.8 IMF Quota
		Subscription and other
		payments in rupees
		included in IMF A/c No.1
		S.VI.1.9 Other Assets net
		of Gold in Banking
		department
		S.VI.2 Other items (net)
		of the Banking System
		(residual)
1. Of contractual maturity of one year or less. 2. Of contractual maturity of above one year. Source: Report of the Working Group on Money Supply: Analytics and Methodology of Compilation (Chairman: Dr. Y.V. Reddy) (1998), Reserve Bank of India.

References
Report of the Second Working Group (Chairman M. L. Ghosh) on “Money Supply in India: Concepts, Compilation and Analysis”, Reserve Bank of India, Bombay, 1977.
Report of the Working Group (Chairman Y. V. Reddy) on “Money Supply: Analytics and Methodology of Compilation”, Reserve Bank of India, Mumbai, June 1998.