Investments by the banking system in government securities has fallen sharply by Rs 1,199 crore for the fortnight ended December 20, 1996. The figure, as of December 20 1996, stood at Rs 1,82,730 crore, down from Rs 1,83,929 crore on December 6, 1996.
The fall in investments has been accompanied by an increase in bank credit during the same period by Rs 1,974 crore. It rose to Rs 2,59,410 crore on December 20 from Rs 2,57,436 crore on December 6.
This development is viewed as a good augury by bankers. The aggregate deposits of the banking system has risen by Rs 1606 crore for the fortnight ended December 20. At the same time, the fall in demand deposits has been arrested.
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For the past few fortnights, the demand deposits had shown a declining trend, barring the fortnight ended December 20. Demand deposits grew by Rs 288 crore to touch Rs 76,109 crore. Time deposits also moved up by Rs 1,318 crore to touch Rs 3,94,677 crore. The cumulative figure for aggregate deposits stood at Rs 4,70,786 crore.
Incremental ad hocs stood at Rs 3,455 crore on December 20, 1996 as against Rs 4,605 crore on December 22, 1995. The on-tap bills held by the state government was put at Rs 4,534 crore on December 20.
Reserve money rose by Rs 1,893 crore for the week ended December 13, 1996. The rise in reserve money is attributed to the increase in net RBI credit to the government. It rose by Rs 2,534 crore to touch Rs 1,30,342 crore. However, the RBI credit to the commercial sector has fallen by Rs 21 crore to touch Rs 12,390 crore.
Net foreign currency assets also slipped by Rs 420 crore to touch Rs 84,552 crore.
The Reserve Bank of India has boosted the foreign exchange reserves position to well over $24 billion through active open market purchases of foreign currency on the eve of the repayment to the International Monetary Fund.
The foreign exchange reserves touched $24.27 billion on December 27, 1996, up from
$23.95 crore on December 20. The reason behind this is the $200-million increase in the foreign currency assets.
Sources point out that the reserves are being built up for the repayment of the $1-billion loan to the IMF which was due on December 30.
It is pointed out that the latest figures next week might reveal a dip in the foreign currency assets.
However, the Reserve Bank, as part of a defined strategy, has picked up hard currency from the open market to boost the reserves position.
The reserves are also being boosted to meet repayment of the India Development Bonds due soon.
Another factor that has pushed up the reserves position is the rise in special drawing rights (SDRs) to $122 million on December 27 from almost nil on December 20. It is not clear if the SDRs are those allocated to India or whether it has been purchased from the quota of other countries.