Money supply increased by 7.4 per cent over the March 31 levels, while in the corresponding period last year, it had grown by 5.7 per cent over March 31, 1995.
One of the main reason for the rise in money supply was the growth in banks' credit to the commercial sector, which rose by Rs 2,131 crore to Rs 3,46,848 crore for the fortnight ended October 25, an increase of 0.6 per cent over the previous fortnight.
Besides, net bank credit to the government moved up by 0.3 per cent to Rs 2,76,960 crore for the fortnight ended October 25. Among other sources which contributed to the growth in money supply was a rise in the net forex assets with the banking sector. These rose by 1 per cent over the previous fortnight to touch Rs 86,542 crore.
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Advances by banks as on November 8 also went up by 0.5 per cent over the previous fortnight to touch Rs 2,56,556 crore. Bank credit, which had turned positive for the first time on October 25 over the previous fortnight, continued to remain positive.The rise over the March 31 level was 1 per cent at Rs 2,541 crore. In the corresponding period last year, bank credit had moved up by 7.9 per cent to Rs 16,802 crore.
The rise in bank credit is attributed to the commencement of the busy season and cut in the lending rate by banks and financial institutions.
The non-food credit went up by Rs 1,089 crore to Rs 2,47,596 crore for the fortnight ended November 8, while aggregate deposits increased to Rs 4,65,217 crore on November 8