The country's foreign exchange reserves with the Reserve Bank of India (RBI) rose by $530 million to stand at $27,505 million on August 26, with a corresponding rise in foreign currency assets (FCA).
It was $26,975 million a week ago, the RBI's weekly statistical supplement (WSS) released on Saturday said. Money market players said the rise could be largely attributed to increased dollar funds from the State Bank of India's (SBI) dollar-denominated ex-patriate Resurgent India Bonds (RIB) scheme, which mopped up over $4.16 billion by August 24. Some portion of the funds were swapped with the apex bank in exchange for rupees, part of which were invested in government bonds. They said the figure would have risen further in the following week on further accretions of the proceeds to reserves. Bank treasurers who met with the central bank on Saturday said the apex bank placed the reserves at $25.9 billion on September 4.
The reserves comprised FCA amounting to $24.460 billion, gold valued at $3.031 billion and special drawing rights (SDRs) at $14 million. In the financial year so far, reserves were down by $1.862 billion. On a year-on-year basis, they dropped by $2.725 billion or 8.65 per cent from $30.212 billion on August 21, 1997. The RBI's advances to state governments came off further by Rs 16 crore to Rs 510 crore from Rs 526 crore a week ago, the report said. Loans and advances to scheduled commercial banks also jumped to Rs 4,590 crore compared with Rs 1,467 crore a week ago.
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Money supply (M3) grew by 17.4 per cent year-on-year, the report said. It stood at Rs 8,64,344 crore on August 14, compared with Rs 8,61,623 crore on July 31, a growth of 0.3 per cent over the fortnight. M3 stood at Rs 7,34,719 last year as on August 15. During the fortnight, net bank credit to the government registered a drop of Rs 3,010 crore to Rs 3,63,687 crore. A dip was registered in the central bank credit to the government by Rs 5,166 crore, and scheduled bank credit to the government rose by Rs 2,156, the WSS said.
This was on account the apex bank's open market operations wherein the bank offloaded some of the government bonds which had devolved on it earlier in the year on to banks, market players said. Net bank credit (RBI and other banks) to the commercial sector continued to show a negative growth, dropping by Rs 580 crore to stand at Rs 4,32,344 crore compared with Rs 4,32,923 crore in July 31, the WSS said. Reserve money, the main driver of money supply, rose by 11.9 per cent year-on-year to Rs 2,28.606 on August 21, the WSS said.