The Centre's resort to ad hoc treasury bills have come down to a meagre Rs 25 crore on January 31, 1997 from Rs 1,685 crore on January 24 over March 31, 1996 levels.
Ad hocs have come down to nominal levels due to a strong appetite for government papers by banks during the current fiscal, especially during the period under review.
Another factor for the level of ad hocs coming down during the last week of January 1997 is due to the fall in net RBI credit to the Centre.
Net RBI credit to the Central government has come down by Rs 6,479 crore to Rs 1,19,054 crore on January 31 as against Rs 1,25,533 crore on January 24.
According to Reserve Bank statistics, investments in the 91-day treasury bills by banks have jumped to Rs 5,411 crore as on January 31 from Rs 2,533 crore a week earlier.
Corporates and money market players were surprised at the banking segments continued preference for investments over the bank's deviating from the traditional business of lending. Increase in investments portfolio by banks has been at a tradeoff with bank credit.
Aggregate bank deposits have shown a smart growth of Rs 7,793 crore during the fortnight ended January 31, that is an increase of 1.6 per cent.
Bank deposits increased to Rs 4,83,338 crore on January 31 from Rs 4,75,545 crore on January 17, 1997.
During the period under review, bank investments increased by 1.6 per cent at Rs 1,90,650 crore on January 31 from Rs 1,87,650 crore on January 17.
But bank credit moved marginally ahead by only 0.7 per cent at Rs 2,67,288 crore from Rs 2,65,526 crore during the same period.
High demand for government stocks by banks is also seen from the fact that investments in government securities went up by Rs 3,056 crore during the second half of January 1997.
Bank investments in gilts on January 31 stood at Rs 1,59,041 crore as against Rs 1,55, 985 crore on January 17.
According to nationalised bank officials, the present preference for investments over lending operations will continue till the end of the current financial year. Because of the slowdown in industry, non-recovery or staggered recovery may result in the NPAs of banks going up.
Hence, to keep balance sheets as clean as possible banks will prefer to lean on investments rather than lend. That apart, the lack of demand for bank credit has forced banks into investments.
The foreign exchange reserves increased marginally by $2 million on February 7, 1997. The reserves increased to $23.99 billion on February 7 from $23.97 billion on January 31.
The marginal rise in the country's foreign exchange reserves is due to the foreign currency assets, which rose to $19.86 billion on February 7 from $198.84 on January 31.
Gold reserves as well as SDRs were at the same levels during the period at $4.09 billion and $28 million respectively.
