Credit-Deposit Ratio Slips To 56.85; M3 Up

The shoring up of forex reserves is crucial in the present year, when the total debt repayments are estimated at $14

billion.

Reflecting the slight upward trend in bullion prices in the London market, the nominal value of gold reserves have increased to $4.45 billion on September 6, 1996 from $4.41 billion on August 30, 1996.

The special drawing rights have also increased to $185 million from $9 million during the same period.

The total reserves have jumped to $22.68 billion from $22.39 billion.

The credit-deposit ratio of the banking system has declined sharply to 56.85 on August 30, 1996 from 57.19 on August 16, 1996.

 

The fall is attributed to the rapid growth in aggregate deposits and a corresponding sluggish growth in bank credit. The aggregate deposits have grown by Rs 3,071 crore for the fortnight ended August 30, 1996 to touch Rs 4,72,941 crore.

Bank credit on the other hand has grown only by Rs 158 crore to touch Rs 2,68,863 crore.

However, an interesting phenomenon is that there has been a fall in demand deposits and a rise in time deposits, which indicates a clear shift to long-term tenures. Bankers attribute this shift to the freeing of deposit rates beyond one year and also reducing the minimum tenure of deposits to 30 days from 46 days.

Investments of the banking system have also jumped to Rs 1,81,000 crore on August 30 from Rs 1,79,161 crore on August 16.

Consequently, the investment- deposit ratio has risen to 38.27 from 38.13. The incremental ad-hoc treasury bills are still below the Rs 9,000-crore intra-year ceiling at Rs 6,310 crore on August 23, 1996. On August 25 last, the figure was Rs 10,990 crore.

The figure is expected to decline further once the advance tax flows come in.

The outstanding ad hocs on August 23, 1996 was Rs 35,755 crore as against Rs 29,445 crore on Marchbuted the currency in circulation and also an increase in demand deposits.