Monetary Statistics

PART I – FINANCIAL STATISTICS

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 Monetary Statistics

1. MONETARY STATISTICS

1.1 INTRODUCTION 1.2. CONCEPTS AND DEFINITIONS

The Reserve Bank of India has a long tradition Various monetary and liquidity aggregates are
of compilation and dissemination of monetary compiled in India and their definitions are set
statistics, since July 1935. In view of the out Table 1.
ongoing changes in the Indian economy as well Table 1.1: Measures of Monetary and
as the developments in monetary sector, working Liquidity Aggregates
groups were set up periodically to review and
refine the monetary aggregates. Three working Reserve Money = Currency in circulation +
groups were set up so far, viz., the First Working Bankers’ deposits with the RBI
Group on Money Supply (FWG) (1961), the + ‘Other’ deposits with the RBI
Second Working Group (SWG) (1977) and the = Net RBI credit to the
Government + RBI credit to the
“Working Group on Money Supply: Analytics and
commercial sector + RBI’s
Methodology of Compilation” (WGMS) (Chairman: claims on banks + RBI’s net
Dr. Y.V. Reddy) (1998). Monetary statistics at foreign assets + Government’s
present are compiled on a balance sheet currency liabilities to the public
framework with data drawn from the banking – RBI’s net non-monetary
sector and postal authorities. The rationale and liabilities
analytical foundations behind the compilation M1 = Currency with the public +
of monetary aggregates have been provided to Demand deposits with the
banking system + ‘Other’
the public through various reports, especially
deposits with the RBI.
through the reports of the various working
M2 = M1 + Savings deposits of post
groups. Monetary aggregates are published on
office savings banks
a regular basis in most of the major publications
M3 = M1+ Time deposits with the
of RBI, such as Bank’s Annual Report, Report
banking system
on Currency and Finance, Handbook of
= Net bank credit to the
Statistics, RBI Bulletin, Weekly Statistical
Government + Bank credit to
Supplement, etc. the commercial sector + Net
There is no unique definition of ‘money’, either foreign exchange assets of the
as a concept in economic theory or as banking sector + Government’s
currency liabilities to the public
measured in practice. Money is a means of
– Net non-monetary liabilities
payment and thus a lubricant that facilitates of the banking sector
exchange. Money also acts as a store of value
M4 = M3 + All deposits with post
and a unit of account. In the real world, office savings banks (excluding
however, money provides monetary services National Savings Certificates).
along with tangible remuneration. It is for this NM1 = Currency with the public +
reason that money has to have relationship Demand deposits with the
with the activities that economic entities banking system + ‘Other’
pursue. Money can, therefore, be defined for deposits with the RBI.
policy purposes as the set of liquid financial NM2 = NM1 + Short-term time deposits
assets, the variation in the stock of which of residents (including and up
could impact on aggregate economic activity. to the contractual maturity of
one year).
As a statistical concept, money could include
certain liquid liabilities of a particular set of NM3 = NM2 + Long-term time deposits
of residents + Call/Term
financial intermediaries or other issuers. Thus,
funding from financial
like other countries, a range of monetary and institutions.
liquidity measures are compiled in India.

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Manual on Financial and Banking Statistics

L1 = NM3 + All deposits with the institutions, financial institutions and sundry
post office savings banks deposits net of IMF Account No.1.
(excluding National Savings
Certificates). ‘Net Reserve Bank credit to Government’ includes
the Reserve Bank’s credit to Central as well as
L2 = L1 +Term deposits with term
lending institutions and State Governments. It includes ways and means
refinancing institutions (FIs) + advances and overdrafts to the Governments, the
Term borrowing by FIs + Reserve Bank’s holdings of Government
Certificates of deposit issued by securities, and the Reserve Bank’s holdings of
FIs.
rupee coins less deposits of the concerned
L3 = L2 + Public deposits of non- Government with the Reserve Bank. The Reserve
banking financial companies. Bank’s claims on banks include loans to the
Net bank credit = Net RBI credit to the banks including NABARD. In case of the new
to the Government (i.e., Net RBI monetary aggregates, the RBI’s refinance to the
Government Credit to the Centre + Net RBI NABARD, which was earlier part of RBI’s claims
Credit to State Governments) + on banks, has been classified as part of RBI
Other banks’ credit to the
Government credit to commercial sector.

Bank credit to = RBI credit to the commercial The ‘Reserve Bank’s credit to the commercial
the commercial sector + Other banks’ credit to sector’ represents investments in bonds/shares
sector the commercial sector of financial institutions, loans to them and
Net foreign = RBI’s net foreign assets + holdings of internal bills purchased and
assets of the Other banks’ foreign assets discounted. ‘Government’s currency liabilities to
banking sector the public’ comprise rupee coins and small coins.
Net non- = RBI’s net non-monetary The Reserve Bank’s net foreign assets are its
monetary liabilities + Net non-monetary holdings of foreign currency assets and gold. The
liabilities of the liabilities of other banks.
banking sector
gold reserves of Issue Department of the Reserve
Bank were valued at Rs. 21.24 per tola till
October 5, 1956; thereafter, at Rs. 62.50 per
tola till January 31, 1969 and subsequently at
Various components of monetary and liquidity
Rs. 98.44 per tola (Rs.84.39 per 10 gms) up to
aggregates are further set out below:
October 16, 1990. From October 17, 1990 gold
‘Currency in circulation’ includes notes in is valued at the end of the month at 90 per
circulation, rupee coins and small coins. Rupee cent of the daily average price quoted at London
coins and small coins in the balance sheet of for the month. The rupee equivalent is
the Reserve Bank of India include ten-rupee determined on the basis of exchange rate
coins issued since October 1969, two rupee-coins prevailing on the last business day of the month.
issued since November 1982 and five rupee coins Unrealised gains/ losses are adjusted to the
issued since November 1985. Currency with the Currency and Gold Revaluation Account (CGRA).
public is arrived at after deducting cash with The Reserve Bank’s net foreign exchange assets
banks from total currency in circulation, as take into account the impact of appreciation in
reported by RBI. the value of gold following its revaluation close
‘Bankers’ deposits with the Reserve Bank’ to international market price effective October
represent balances maintained by banks in the 17, 1990. Such appreciation has a corresponding
current account with the Reserve Bank mainly effect on Reserve Bank’s net non-monetary
for maintaining Cash Reserve Ratio (CRR) and liabilities.
as working funds for clearing adjustments. ‘Other liabilities of the Reserve Bank’ include
‘Other’ Deposits with the Reserve Bank, for the internal reserves and provisions of the Reserve
purpose of monetary compilation, include Bank such as Exchange Equalisation Account
deposits from foreign central banks, multilateral (EEA), Currency and Gold Revaluation Account

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 Monetary Statistics

(CGRA), Contingency Reserve and Asset demand liabilities portion of savings bank
Development Reserve. The reserves, viz., deposits, margins held against letters of credit/
Contingency Reserve, Asset Development Reserve, guarantees, balances in overdue fixed deposits,
CGRA and EEA reflected in ‘Other Liabilities’ are cash certificates and cumulative/ recurring
in addition to the ‘Reserve Fund’ of Rs.6,500 deposits, outstanding Telegraphic Transfers (TTs),
crore held by the Reserve Bank as a distinct Mail Transfers (MTs), Demand Drafts (DDs),
balance sheet head. Gains/losses on valuation unclaimed deposits, credit balances in the Cash
of foreign currency assets and gold due to Credit account and deposits held as security for
movements in the exchange rates and/or prices advances which are payable on demand. Money
of gold are not taken to Profit and Loss Account at Call and Short Notice from outside the
but instead booked under a balance sheet head Banking System is shown against liability to
named as CGRA. The balance represents others.
accumulated net gain on valuation of foreign
currency assets and gold. CGRA was earlier ‘Time deposits’ are those which are payable
otherwise than on demand and they include fixed
known as Exchange Fluctuation Reserve (EFR).
The balance in EEA represents provision made deposits, cash certificates, cumulative and
for exchange losses arising out of forward recurring deposits, time liabilities portion of
savings bank deposits, staff security deposits,
commitments. Contingency Reserve represents
the amount set aside on a year-to-year basis for margin money held against letters of credit if
not payable on demand, India Millennium
meeting unexpected and unforeseen
contingencies including depreciation in value of Deposits and Gold Deposits.
securities, exchange guarantees and risks arising ‘Net bank credit to Government’ comprise the
out of monetary/ exchange rate policy RBI’s net credit to Central and State
compulsions. In order to meet the internal capital Governments and commercial and co-operative
expenditure and make investments in banks’ investments in Central and State
subsidiaries and associate institutions, a further Government securities. ‘Bank credit to
specified sum is provided and credited to the commercial sector’ include RBI’s and other
Asset Development Reserve. bank’s credit to commercial sector. Other banks’
‘Net non-monetary liabilities (NNML) of the credit to commercial sector includes banks’ loans
Reserve Bank’ are liabilities which do not have and advances to the commercial sector (including
scheduled commercial banks’ food credit) and
any monetary impact. These comprise items such
as the Reserve Bank’s paid-up capital and banks’ investments in “other approved”
reserves, contribution to National Funds (NIC- securities.
LTO Fund and NHC-LTO Fund), RBI employees’ The acronyms NM1, NM2 and NM3 are used to
PF and superannuation funds, bills payable, distinguish the new monetary aggregates [as
compulsory deposits with the RBI, RBI’s profit proposed by the Working Group on Money
held temporarily under other deposits, amount Supply: Analytics and Methodology of
held in state Governments Loan Accounts under Compilation (WGMS) (Chairman: Dr. Y.V. Reddy),
other deposits, IMF quota subscription and other June 1998] from the existing monetary
payments and other liabilities of RBI less net aggregates. NM 2 and NM 3 are based on the
other assets of the RBI. Similarly, NNML of residency concept and hence do not directly
banks include items such as their capital, reckon non-resident foreign currency repatriable
reserves, provisions, etc. NNML of the banking fixed deposits in the form of FCNR(B) deposits,
sector includes NNML of the Reserve Bank and Resurgent India Bonds (RIBs) and India
that of other banks. Millennium Deposits (IMDs). Residency
‘Currency with the public’ is currency in essentially relates to the country in which the
holder has a centre of economic interest.
circulation less cash held by banks. ‘Demand
deposits’ include all liabilities which are payable Currency and deposits held by the non-residents
in the rest of the world sector would be related
on demand and they include current deposits,

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Manual on Financial and Banking Statistics

to balance of payments considerations such as overdrafts, bills purchased and discounted,

international capital flows rather than to the and investments in approved securities
domestic demand for monetary assets or to the other than government securities. However,
use of money in domestic transactions. While commercial banks have in recent years been
there is a need to categorise deposit liabilities investing in securities such as commercial
by residency, it may not be appropriate to paper, shares and debentures issues by the
exclude all categories of non-resident deposits commercial sector, which are not reflected
from domestic monetary aggregates as non- in the conventional credit aggregates. The
resident rupee deposits are essentially integrated definition of bank credit has been broadened
into the domestic financial system. Therefore, to include such investments.
only non-resident repatriable foreign currency 3. Net foreign exchange assets (NFA) of the
fixed deposits are excluded from deposit liabilities banking sector comprise the RBI’s net
and treated as external liabilities. Accordingly, foreign exchange assets and the net foreign
from among the various categories of non- currency assets of the banking system. Net
resident deposits, FCNR(B), Resurgent India foreign currency assets of the banking
Bonds (RIBs), and India Millennium Deposits system comprise their holdings of foreign
(IMDs) were classified as external liabilities and currency assets net of i) their holdings of
excluded from the domestic money stock. Other non-resident repatriable foreign currency
major features of the new monetary and liquidity fixed deposits which is presently defined to
aggregates are as follows: include FCNR(B) deposits and ii) overseas
1. Compilation of four measures of monetary foreign currency borrowings.
aggregates, and three measures of liquidity 4. In the new monetary aggregate NM3, capital
aggregates besides a comprehensive account consists of paid-up capital and
financial sector survey. NM0 is essentially reserves. ‘Other Items (net)’ is the residual,
the monetary base, compiled mainly from balancing the components and sources of
the balance sheet of the Reserve Bank of the monetary and banking accounts and
India; NM1 purely reflects the non-interest includes other demand and time liabilities,
bearing monetary liabilities of the banking net inter-bank liabilities, etc., as applicable.
sector; NM2 includes besides currency and
current deposits, saving and short-term 1.3 COVERAGE
deposits reflecting the transactions balances At present monetary aggregates are compiled
of entities. NM3 was redefined to reflect based on the data from the scheduled
additionally to NM2 the call funding that the commercial banks, cooperative banks, urban
banking system obtains from other financial cooperative banks and the post offices. The
institutions. coverage of co-operative banks has increased over
2. Bank credit is often specifically referred, in time (Table 1.2). As regards co-operative banks,
monetary economics, as a critical variable data up to February 1970 include State co-
affecting consumption and capital formation operative banks, while the data from March 1970
in a direct manner. As such it is often onwards are inclusive of central co-operative
regarded as a more useful indicator of real banks and primary co-operative banks.
sector activity than money supply. In India,
one of the objectives of monetary policy is 1.3.1 Changes in the Compilation
clearly stated in official documents as one There was a change in the treatment of
of ensuring adequate flow of credit to the apportionment of savings deposits into its two
productive sectors of the economy. While components - demand and time in March 1978.
credit to government from the banking Savings bank accounts are bifurcated into demand
system is clearly identified, bank credit to and time portions depending on whether interest
the commercial sector, includes only is actually paid on such deposits. Banks are
advances in the form of loans, cash credit, required to report such classification on the basis

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 Monetary Statistics

of the position as at close of business at September monetary aggregates in India has been
30 and March 31 instead of as at end-June and as encapsulated in the table appended below (Table
at end-December as done hitherto. 1.2).

The evolution of methodology of compilation of

Table 1.2: Money Stock Measures: Evolution of Methodology of Compilation
First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4
Components (C)

C.I. Currency with the C.I. Currency with the C.I. Currency with the
Public (C.I.1+C.I.2-C.I.3- Public (C.I.1+C.I.2-C.I.3- Public (C.I.1+C.I.2-C.I.3)
C.I.4-C.I.5) C.I.4)
C.I.1 Notes in circulation C.I.1 Notes in circulation C.I.1 Notes in circulation
C.I.2 Circulation of Rupee C.I.2 Circulation of C.I.2 Circulation of Comprise rupee coins and
coins and small coins i.e., Rupee coins and small Rupee coins and small small coins. Ten-rupee
Government’s currency coins i.e., Government’s coins i.e., Government’s coins issued since
liabilities to the Public currency liabilities to the currency liabilities to the October 1969, two rupee-
Public Public coins issued since
November 1982 and five
rupee coins issued since
November 1985 are
included under rupee
coins. Net of return of
Indian notes from
Pakistan.

C.I.3 Currency returned C.I.3 Currency returned

by Pakistan by Pakistan
C.I.4 Cash in hand with C.I.4 Cash in hand with C.I.3 Cash in hand with The FWG considered only
banks i.e., commercial the banking system i.e., the banking system commercial and state co-
banks and state co- commercial banks, state operative banks while the
operative banks co-operative banks, SWG extended the
central co-operative coverage to central co-
banks and primary co- operative banks and
operative banks primary co-operative
banks consisting of urban
co-operative banks and
salary earners’ societies.
C.I.5 Balance of the Since August 1967,
Central and State balances held at
Governments held at treasures have not been
treasuries included in the measure
in view of their meagre
amounts.
C.II. Aggregate Deposits C.II. Aggregate Deposits C.II. Aggregate Deposits With the inclusion of
with Banks (C.II.1+C.II.2) with the Banking System held by Residents with central and urban co-
(C.II.1+C.II.2) the Banking System operative banks, the SWG
(CII.1+C.II.2-C.II.2.2.1- treated inter-bank
C.II.2.3.1) deposits with the banking
system as part of net
non-monetary liabilities
[i.e., other items (net) as
defined by the Working
Group on Money Supply

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Manual on Financial and Banking Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4
(WGMS): Analytics and
Methodology Compilation.
The WGMS recommended
that aggregate deposits
should be on residency
basis, thereby excluding
repatriable foreign
currency fixed deposits
held by non-residents,
e.g., FCNR(B) deposits,
from money supply.

C.II.1 Demand Deposits C.II.1 Demand Deposits C.II.1 Demand Deposits

with banks (including with the banking system. with the banking system.
inter-bank demand
deposits with state co-
operative banks)

C.II.2 Time Deposits with C.II.2 Time Deposits with C.II.2 Time Deposits held The WGMS recommended
banks (including inter- the banking system. by Residents with the a break-up of time
bank time deposits with banking system. deposits into CDs and
state co-operative banks) (CII.2.1+C.II.2.2+ other time deposits on
C.II.2.3) the basis of maturity
structure partitioned at
C.II.2.1 Certificates of one year.
Deposit (CDs)

C.II.2.2 Short-term1 time

deposits

C.II.2.2.1 Foreign
Currency Repatriable
short-term1 ‘Fixed
Deposits held by Non-
Residents
2
C.II.2.3 Long-term time
deposits

C.II.2.3.1 Foreign
Currency Repatriable
long-term2 Fixed
Deposits held by Non-
Residents

C.II.3 Savings Accounts

C.II.3.1 Time Liabilities

portion of Savings
Accounts

C.III. ‘Other’ deposits with C.III. ‘Other’ deposits C.III. ‘Other’ deposits with
the RBI (C.III.1-C.III.2) with the RBI (C.III.1- the RBI (C.III.1-C.III.2-
C.III.2-C.III.3-C.III.4- C.III.3-C.III.4-C.III.5)
C.III.5)

C.III.1 Other Deposits C.III.1 Other Deposits C.III.1 Other Deposits

with the RBI with the RBI with the RBI

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 Monetary Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4
C.III.2 IMF Deposits with C.III.2 IMF Deposits with C.III.2 IMF Deposits with
RBI in Account No.1 * RBI in Account No.1 * RBI in Account No.1 *

C.III.3 RBI Employees’ C.III.3 RBI Employees’ Balances under Reserve

Pension/ Provident/Co- Pension/ Provident/Co- Bank Employees’
operative Guarantee operative Guarantee Pension/Provident and
Funds Funds Co-operative Guarantee
Funds have been
excluded from money
supply since January
1964.

C.III.4 Compulsory C.III.4 Compulsory Balances under

Deposits with RBI Deposits with RBI Additional Emoluments
(Compulsory Deposits)
Act 1974 and the
Compulsory Deposit
Scheme (Income Tax
Payers) Act were excluded
from money supply
effective August 16, 1974
and December 13, 1974,
respectively.

C.III.5 Profits of the RBI C.III.5 Profits of the RBI

held temporarily under held temporarily under
other deposits and other deposits and
subscriptions to state subscriptions to state
governments’ loans governments’ loans
pending allotment pending allotment

C.IV. Post Office Total C.IV. Post Office Total Post Office Deposits were
Deposits Deposits included in the monetary
aggregates by the SWG.
C.IV.1 Post Office C.IV.1 Post Office The WGMS recommended
Savings Deposits Savings Deposits that these should be part
of liquidity aggregates.
C.V. Call/Term Money Borrowings represent
Borrowings by Scheduled money at call and short
Commercial Banks from notice obtained from
non-bank sources outside the banking
(excluding PDs) system, but exclude
refinance from RBI and
financial institutions.

C.IV. Money Supply with C.V. Narrow Money C.VI. Narrow Money There is a break in the
the Public (M1)(=C.I+C.II.1+C.III) (M1)(=C.I+C.II.1+C.III) M1 series following the
(=C.I+C.II.1+C.III) reclassification of
demand and time

* IMF Account No. 1

The IMF conducts its financial dealings with a member through the fiscal agency and the depository designated by the
member. In addition, each member is required to designate its central bank as a depository for the IMF’s holding of the
member’s currency, or if it has no central bank, a monetary agency or a commercial bank acceptable to IMF. Most
members have designated their central banks as both the depository as well as the financial agency.
The depository maintains without any service charge or commission, two accounts that are used to record the IMF’s
holdings of the member’s currency the IMF’s account no. 1 and IMF’s account no. 2 The no. 1 account is used for IMF
transactions, including subscription payments, purchases and repurchases and repayment of resources borrowed by IMF.

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Manual on Financial and Banking Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4
components of savings
accounts vide circular
DBOD.No.Ref.BC.127/C-
96(Ret)-77 dated October
15, 1977.

C.VI. M2 (=C.V.+C.IV.1) C.VII. M2 (=C.VI +

C.II.2.1 + C.II.2.2-
C.II.2.2.1+ C.II.3.1)

C.V. Aggregate Monetary C.VII. Broad Money (M3) C.VIII. Broad Money (M3) Data on aggregate
Resources (=C.IV+C.II.2) (=C.V + C.II.2) (=C.VII + C.II.2.3- monetary resources
C.II.2.3.1 + C.V) proposed by the FWG
were first published in
the Bank’s Annual Report
1964-65 and in the
Report on Currency and
Finance 1967-68.

C.VIII. M4 (=C.IV+C.VII.)

C.IX. L1 (=C.IV+C.VIII)

C.X. Term Deposits of Includes IDBI, ICICI,

Financial Institutions IFCI, IIBI, EXIM Bank,
(FIs) TFCI, NABARD, SIDBI
and NHB
C.XI. Certificates of
Deposit issued by FIs.

C.XII. Term Borrrowings

by FIs.

C.XIII. L2 (=C.IX +C.X+

C.XI +C.XII)

C.XIV. Public Deposits Includes NBFCs having

by Non-Banking public deposits of Rs. 20
Financial Companies crore or above
(NBFCs)

C.XV. L3 (=C.XIII +
C.XIV)

SOURCES (S)

S.I Net Bank Credit to S.I Net Bank Credit to S.I Net Bank Credit to
Government Sector Government Sector Government (S.I.1+S.I.2)
(S.I.1+S.I.2) (S.I.1+S.I.2)
S.I.1 Net RBI Credit to S.I.1 Net RBI Credit to S.I.1 Net RBI Credit to
Government Sector Government Sector Government
(S.I.1.1 + S.I.1.2 + S.I.1.3+ (S.I.1.1+S.I.1.2) (S.I.1.1+S.I.1.2)
S.I.1.4 + S.I.1.5-
S.I.1.6+S.I.1.7-S.I.1.8)
S.I.1.1 Net RBI Credit to S.I.1.1 Net RBI Credit to
the Central Government Central Government
(S.I.1.1.1 + S.I.1.1.2 + (S.I.1.1.1+S.I.1.1..2 +

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 Monetary Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4

S.I.1.1.3 + S.I.1.1.4 + S.I.1.1.3 + S.I.1.1.4 +

S.I.1.1.5 - S.I.1.1.6) S.I.1.1.5-S.I.1.1.6)

S.I.1.1 Loans and S.I.1.1.1 Loans and S.I.1.1.1 Loans and

Advances to the Central Advances to the Central Advances to the Central
Government Government Government

S.I.1.2 Bills Purchased S.I.1.1.2 Bills Purchased S.I.1.1.2 Bills Purchased

and Discounted and Discounted and Discounted

S.I.1.3 Investments in S.I.1.1.3 Investments in S.I.1.1.3 Investments in

Treasury Bills Treasury Bills short-term1 Central
Government securities

S.I.1.4 Investments in S.I.1.1.4 Investments in S.I.1.1.4 Investments in

Government of India Central Government long-term2 Central
Securities Securities Government Securities
S.I.1.5 Rupee coins held S.I.1.1.5 Rupee coins S.I.1.1.5 Rupee coins
by the RBI held by the RBI held by the RBI
S.I.1.6 Deposits of the S.I.1.1.6 Deposits of the S.I.1.1.6 Deposits of the
Central Government with Central Government with Central Government with
the RBI the RBI the RBI
S.I.1.2 Net RBI credit to S.I.1.2 Net RBI credit to
the State Government the State Government
(S.I.1.2.1-S.1.2.2) (S.I.1.2.1-S.I.1.2.2)
S.I.1.7 Loans and S.I.1.2.1 Loans and S.I.1.2.1 Loans and
Advances to State Advances to State Advances to State
Governments Governments Governments
S.I.1.8 Deposits of State S.I.1.2.2 Deposits of S.I.1.2.2 Deposits of
Governments State Governments State Governments
S.I.2 Other Banks’ credit S.I.2 Other Banks’ credit S.I.2 Credit to
to Government (S.I.2.1 + to Government Government by the
S.I.2.2) (=S.I.2.1) Banking System (S.I.2.1
+ S.I.2.2)
S.I.2.1 Other Banks’ S.I.2.1 Other Banks’ S.I.2.1 Investments in Treasury Bills are to be
investments in investments in short-term Government valued at carrying cost.
Government securities Government securities securities by the
Banking System

S.I.2.2 Investments in
long-term2 Government
securities by the
Banking System

S.I.2.2 Government’s Government’s currency

Currency Liabilities to the liabilities to the Public
Public adjusted for were carved out as an
balances in treasuries independent source of
money stock in October
1962.
S.II. Total Bank Credit to S.II. Total Bank Credit to S.II. Bank Credit to The nomenclature
Private Sector Commercial Sector Commercial Sector “private sector” was
(S.II.1+S.II.2) (S.II.1+S.II.2) (S.II.1+S.II.2) changed into “commercial

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Manual on Financial and Banking Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4

sector” in 1970, as bank

credit included credit
given to commercial/
manufacturing
enterprises in the public
sector too.
S.II.1 RBI Credit to S.II.1 RBI Credit to S.II.1 RBI Credit to
Private Sector Commercial Sector Commercial Sector
(S.II.1.1+S.II.1.2) (S.II.1.1+S.II.1.2+S.II.1.3) (S.II.1.1+S.II.1.2+S.II.1.3)

S.II.1.1 RBI’s investments S.II.1.1 RBI’s S.II.1.1 RBI’s

in shares/bonds of investments in shares/ investments in shares/
financial institutions, bonds of financial bonds of financial
ordinary debentures of co- institutions, ordinary institutions, ordinary
operative sectors, Central debentures of co- debentures of co-
Land Mortgage Bank operative sectors, CLMB operative sectors, CLMB
(CLMB) debentures etc. debentures etc. debentures etc.

S.II.1.2 Loans to financial S.II.1.2 Loans to S.II.1.2 Loans to On the establishment of

institutions financial institutions financial institutions National Bank for
Agriculture and Rural
Development (NABARD)
on July 12, 1982, certain
assets and liabilities of
the RBI were transferred
to NABARD, necessitating
some reclassification of
aggregates on the sources
side of money stock since
that date. The WGMS
recommended the
reclassification of the
RBI’s refinance to
NABARD as credit to
commercial sector rather
than as claims on banks
as had been the practice
hitherto.

S.II.1.3 Internal Bills S.II.1.3 Internal Bills With the introduction of

(under Bills (under Bills the Bills Rediscounting
Rediscounting Scheme) Rediscounting Scheme) Scheme, the commercial
banks started discounting
the internal bills with the
RBI which have been
included in the RBI credit
to commercial sector
since June 1971.
S.II.2 Other Banks’ net S.II.2 Other Banks’ S.II.2 Credit to the
credit to Private Sector credit to Commercial Commercial Sector by
(S.II.2.1 + S.II.2.2-S.II.2.3 Sector (S.II.2.1 + the Banking System
-S.II.2.4-S.II.2.5) S.II.2.2) (S.II.2.1 + S.II.2.2+
S.II.2.3 + S.II.2.4)

S.II.2.1 Bank Credit S.II.2.1 Bank Credit S.II.2.1 Bank Credit Includes loans, cash
credit and overdrafts and
internal and foreign bills
purchased and

12
 Monetary Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4

discounted of SCBs,
RRBs.

S.II.2.2 Other S.II.2.2 Other S.II.2.2 Investments in

Investments Investments other Approved
Securities

S.II.2.3 Other Include investments in

Investments securities which are not
approved for maintenance
of statutory liquidity ratio
(SLR) such as
Commercial Papers, units
of UTI and mutual funds
and shares/debentures/
bonds of the public and
private non-bank sector.

S.II.2.3. Net inter-bank As data for central and

Liabilities primary co-operative
banks were not included
in money supply, the
FWG had adjusted bank
credit for net inter-bank
liabilities. These were,
however, treated as part
of net non-monetary
liabilities by the SWG on
extension of full coverage
to the co-operative sector.

S.II.2.4 Loans from The FWG had adjusted

financial institutions bank credit against loans
from select financial
institutions which
received refinance from
the RBI which had
already been reckoned in
the RBI credit to the
commercial sector. The
SWG did away with this
adjustment as it was
argued that these FIs had
substantial access to
sources of funds other
than those from the RBI.

S.II.2.4 Net lending to Banks’ net lendings to

Primary Dealers PDs, net of their call
borrowings from PDs, are
part of net inter-bank
assets under the present
reporting format.
However, as the banking
sector in money supply
excludes PDs, this item
was included as part of
credit from the banking
system by the WGMS.

13
Manual on Financial and Banking Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4

S.II.2.5 Time deposits This adjustment was

held by Banks (including considered necessary
inter-bank time deposits since the FWG was
held by state co-operative concerned with M1. The
banks) presentation of data on
bank credit to
commercial sector on net
basis was changed into
gross basis in May 1974,
as (i) time deposits are
used not only for
financing bank credit to
commercial sector but
also for lending to the
Government and (ii) these
are not owned by
commercial enterprises
who largely borrow from
banks.
S.III Net Foreign S.III Net Foreign S.III Net Foreign
Exchange Assets of the Exchange Assets of the Exchange Assets of the
Banking Sector Banking Sector Banking Sector
(S.III.1+S.III.2) (S.III.1+S.III.2) (S.III.1+S.III.2)

S.III.1 Net Foreign S.III.1 Net Foreign S.III.1 Net Foreign

Exchange Assets of the Exchange Assets of the Exchange Assets of the
RBI (S.III.1.1 + S.III.1.2 + RBI (S.III.1.1 + S.III.1.2 + RBI (S.III.1.1 + S.III.1.2-
S.III.1.3-S.III.1.4-S.III.1.5) S.III.1.3-S.III.1.4- S.III.1.3+S.III.1.4)
S.III.1.5)

S.III.1.1 Gold Coin and S.III.1.1 Gold Coin and S.III.1.1 Gold Coin and Inclusive of valuation of
Bullion Bullion Bullion Gold following its
revaluation close to
international market
price effective October 17,
1990. Such revaluation
has a corresponding
effect on Reserve Bank’s
net non-monetary
liabilities (capital
account)

S.III.1.2 Foreign Since July 1996, foreign

Currency Assets of the currency assets are being
RBI(S.III.1.2.1+S.III.1.2.2) valued at the exchange
rate prevailing at the end
of every week. Such
revaluation has a
corresponding effect on
Reserve Bank’s net non-
monetary liabilities
(capital account).

S.III.1.2 Foreign S.III.1.2 Foreign S.III.1.2 Foreign Certain foreign securities

Securities Securities Securities e.g., IBRD shares,
Commonwealth bonds
etc. which were part of
RBI’s claims on

14
 Monetary Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4

Government were
reclassified as part of its
foreign assets by the
SWG.

S.III.1.3 Balances held S.III.1.3 Balances held S.III.1.2.2 Balances held

abroad abroad abroad

S.III.1.4 IMF A/c No.1 S.III.1.4 IMF A/c No.1 S.III.1.3 IMF A/c No.1

S.III.1.5 Special Currency S.III.1.5 Quota S.III.1.4 Quota

withdrawn from Gulf subscription in rupees. subscription in rupees.
States held under Other
deposits of the RBI if any.

S.III.2 Net Foreign S.III.2 Net Foreign S.III.2 Net Foreign

Exchange Assets of Exchange Assets of Currency Assets of
Banking System Banking System Banking System(S.III.2.1-
(Authorised Dealers’ S.III.2.2-S.III.2.3)
Balances)

S.III.2.1 Foreign Includes balances held

Currency Assets of the abroad (i.e., the cash
Banking System component of nostro
accounts, etc.) and
investments in eligible
foreign securities and
bonds.
S.III.2.2. Overseas
Borrowings of the
Banking System

S.III.2.3 Non-Resident
Repatriable Foreign
Currency Fixed Deposits
with the Banking System
(C.II.2.2.1+C.II.2.3.1)

S.IV. Government’s S.IV. Government’s Net of Indian currency

Currency Liabilities to Currency Liabilities to returned by Pakistan
the Public the Public awaiting adjustment.
S.IV. Net non-monetary S.V. Net non-monetary S.V. Capital Account of The WGMS has
Liabilities of the Banking Liabilities of the Banking the Banking Sector bifurcated the non-
Sector (S.IV.1+S.IV.2) Sector (S.V.1+S.V.2) (S.V.1+S.VI.2) monetary liabilities of the
banking sector into the
capital account and other
items (net).

S.IV.1 Net non-monetary S.V.1 Net non-monetary S.V.1 Capital Account of

Liabilities of the RBI Liabilities of the RBI the RBI (S.V.1.1 +
(S.IV.1.1 + S.IV.1.2 + (S.V.1.1 + S.V.1.2 + S.V.1.2 + S.V.1.3 +
S.IV.1.3 + S.IV.1.4 + S.V.1.3 + S.V.1.4 + S.V.1.4 + S.V.1.5 +
S.IV.1.5 - S.IV.1.6 + S.V.1.5 + S.V.1.6 + S.V.1.6)
S.IV.1.7) S.V.1.7 + S.V.1.8 -
S.V.1.9)

S.IV.1.1 Paid-up Capital S.V.1.1 Paid-up Capital S.V.1.1 Paid-up Capital

S.IV.1.2 Reserves S.V.1.2 Reserves S.V.1.2 Reserves

15
Manual on Financial and Banking Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4

S.IV.1.3 Contributions to S.V.1.3 Contributions to S.V.1.3 Contingency

National Funds National Funds Reserves

S.IV.1.4 Bills Payable S.V.1.4 RBI Employees’ S.V.1.4 Exchange

Pensions/ Provident/ Fluctuation Reserve /
Guarantee Funds Currency and Gold
Revaluation Account

S.IV.1.5 Other Liabilities S.V.1.5 Compulsory S.V.1.5 Exchange

Deposits with the RBI Equalisation Account

S.IV.1.6 Other Assets net S.V.1.6 Bills Payable S.V.1.6 Contributions to

of Gold in Banking National Funds
Department

S.IV.1.7 Indian currency S.V.1.7 Other Libabilities

returned by Pakistan
awaiting adjustment S.V.1.8 IMF Quota
Subscription and other
payments in rupees
included in IMF A/c No.1

S.V.1.9 Other Assets net

of Gold in Banking
department

S.V.2 Capital Account of

the Banking System
(S.V.2.1+S.V.2.2)S.V.2.1
Paid-up Capital S.V.2.2
Reserves

S.IV.2 Non-identifiable S.V.2 Net non-monetary S.VI. Other items (net) of

net non-monetary liabilities of the Banking the Banking Sector
liabilities of other Banks System (residual) (S.VI.1 + S.VI.2)
(residual)
S.VI.1 Other items (net)
of the RBI (S.VI.1.1 +
S.VI.1.2 + S.VI.1.3+
S.VI.1.4 - S.VI.1.5-
S.VI.1.6 - S.VI.1.7+
S.VI.1.8- S.VI.1.9)

S.VI.1.1 RBI Employees’

Pensions/ Provdent/
Guarantee Funds

S.VI.1.2 Compulsory
Deposits with the
RBIS.VI.1.3 Bills Payable

S.VI.1.4 Other Liabilities

Excludes contingency
reserve, exchange
fluctuation reserve and
exchange equalization
account which now form
part of capital account
and are, therefore,
adjusted.

16
 Monetary Statistics

First Working Group Second Working Group Working Group on Money REMARKS
(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4

S.VI.1.5 Contingency
ReservesS.VI.1.6
Exchange Fluctuation
Reserve / Currency and
Gold Revaluation
Account

S.VI. 1.7 Exchange

Equalisation Account

S.VI.1.8 IMF Quota

Subscription and other
payments in rupees
included in IMF A/c No.1

S.VI.1.9 Other Assets net

of Gold in Banking
department

S.VI.2 Other items (net)

of the Banking System
(residual)

1. Of contractual maturity of one year or less.

2. Of contractual maturity of above one year.
Source: Report of the Working Group on Money Supply: Analytics and Methodology of Compilation (Chairman:
Dr. Y.V. Reddy) (1998), Reserve Bank of India.

References Report of the Working Group (Chairman Y. V.

Report of the Second Working Group (Chairman Reddy) on “Money Supply: Analytics and
M. L. Ghosh) on “Money Supply in India: Methodology of Compilation”, Reserve Bank of
Concepts, Compilation and Analysis”, Reserve India, Mumbai, June 1998.
Bank of India, Bombay, 1977.

17