The foreign currency assets (FCA) of Reserve Bank of India declined by $772 million to $24,378 million in just the last week of November. In the fortnight between November 13 and 28, FCA has slipped from $25,969 million to $ 24,378 million.
As on November 28, total forex reserves stood at $28,114 million of which FCA constituted $24,378 million, gold $3,735 million and special drawing rights $1 million.
The central bank has been intervening in the spot and forward markets with a view to stem the fall of the rupee. It is estimated that forward sales of dollar is to the tune of $1.3 billion. Since November 28, the RBI has not intervened in the forex market. Instead it has opted to suck out the excess liquidity in the system and push up short term interest rates and curb what it terms speculative tendencies in the forex market.
During the fortnight-ended November 21, aggregate deposits of the banking system grew by Rs 1,993 crore; demand deposits dipped by Rs 994 crore while time deposits increased by Rs 2,987 crore.
Reliance of banks on certificate of deposits continued to decline. From a level of Rs 12,399 crore on April 11 the quantum of certificate of deposits (CD) outstanding has declined to Rs 7,542 crore by October 10. Banks have raised CDs at rates varying in the band of 7.5-12 per cent.
On the assets side, total funds flow to the commercial sector from the banking sector was Rs 3,04,650 crore as on November 21, with the increase being Rs 13,050 crore in the current financial year.
Between November 7 and 21, total funds flow to the commercial sector from the banking sector increased by Rs 33 crore.
Bank credit increased by a meagre Rs 47 crore during the fortnight-ended November 21, with food credit recording a growth of Rs 828 crore while non-food credit decreased by Rs 781 crore.
Investments by banks in government and other securities increased by Rs 1,110 crore. The increase in investment in government securities was to the tune of Rs
1,084 crore while investment in other approved securities went up by a paltry Rs 26 crore. As on November 21, the cash-deposit ratio was 9.73, the credit-deposit ratio was 51.68 and investment-deposit ratio was 40.17. The corresponding figure on November 7 was 10.31, 51.86 and 40.11 respectively. During the first fortnight of November, Rs 670 crore worth of commercial paper was issued at an interest of 7.7 - 11 per cent.
The amount of commercial paper outstanding as on November 15 was Rs 3,459 crore. It is expected that the interest rate on commercial paper would be moving up on account of RBIs policies which are geared towards jacking up the short term interest rates. The year-on-year growth in money supply (M3) has been 17.7 per cent on November 7.
While reserve money grew 2.3 per cent in the first week of November, in the next couple of weeks, it declined by 1.3 per cent and 1.7 per cent respectively.
