Non-Food Credit Rises Rs 6,657 Crore

Non-food advances by the banking sector increased by Rs 6,657 crore during the first fortnight of January.

In the current financial year, advances by commercial banks to commercial sector in the form of credit and investments have increased by Rs 32,632 crore, from Rs 2,90,457 crore to Rs 3,23,179 crore; a growth of 11.23 per cent.

There has been a strong pick up in credit off-take since the third quarter of this financial year which appears to continue through the fourth quarter. It remains to be seen how the liquidity squeeze in the banking system would affect credit off-take.

In the remaining five fortnights of this financial year, if non-food advances by the banking sector increase by an average of Rs 6,000 crore the growth in advances at the end of the year would be 20 per cent.

 

During the first fortnight of January, Rs 1,205crore worth of commercial papers were issued at a discount rate of 8.1 per cent to 11.8 per cent. The quantum of commercial paper outstanding as on January 15 was Rs 5,249 crore. Figures available upto December 19, 1997, reveal that investment by banks in commercial papers was Rs 5,891 crore, while investment in bonds, debentures and preference shares was Rs 26,353 crore. During the first fortnight of January, aggregate deposits of the banking system lagged increase in advances. Aggregate deposits increased by Rs 5,369 crore; time deposits increased by Rs 6,027 crore while demand deposits declined by Rs 6,027 crore. Investments by banks in government securities and other approved securities increased by Rs 210 crore.

As on January 16, aggregate deposits of the banking system stood at Rs 5,64,580 crore, investment by banks in government securities and other approved securities were Rs 1,83,192 crore and Rs 31,557 crore respectively. Non-food advances by the banking sector was Rs 2,88,927 crore and food credit was Rs 12,013 crore.

Till date cash deposit ratio was 9.93, investment deposit ratio 38.04 and credit deposit ratio was 53.30.

The foreign exchange reserves of Reserve Bank of India (RBI) stood bolstered by $369 million on account of a corresponding increase in foreign currency assets (FCA) during the week ended January 23. As on January 23, foreign exchange reserves of RBI stood at $27,118 million; composed of $23,800 million of FCA, $3,313 million of gold and $5 million of special drawing rights (SDR).

The increase in foreign currency assets of the apex bank in the current financial year is $1,433 million, SDRs have increased by $3 million while the value of gold stock held by it has decreased by $741 million on account of decrease in the price of gold. Consequently, the foreign exchange reserves of the central bank increased by $695 million in the current financial year.