Demonetisation 2016: Impact on money supply…some initial trends..

The data for Nov. 11 2016 shows that M3 declined by Rs 38320 Crore in the fortnight.

 

 

Components:

  • Currency declines by Rs 1.75 lakh crore. This is swapped by
  • rise in Time Deposits (Rs 1.06 lakh crore) and
  • partly by demand deposits (Rs 25990 Cr)
Nov. 11 Amount
M3 (in Rs billion) 123767.7 -383.2
1 Components (1.1.+1.2+1.3+1.4)
1.1 Currency with the Public 15262.3 -1,751.50
1.2 Demand Deposits with Banks 10771.7 259.9
1.3 Time Deposits with Banks 97530.8 1065.1
1.4 ‘Other’ Deposits with Reserve Bank 202.9 43.3
2 Sources (2.1+2.2+2.3+2.4-2.5)
2.1 Net Bank Credit to Government 37358.2 -1.7
2.1.1 Reserve Bank 6467.8 -4.8
2.1.2 Other Banks 30890.4 3.1
2.2 Bank Credit to Commercial Sector 79013.6 -601.1
2.2.1 Reserve Bank 79.8 6.1
2.2.2 Other Banks 78933.8 -607.2
2.3 Net Foreign Exchange Assets of Banking Sector 26064.8 71.8
2.4 Government’s Currency Liabilities to the Public 232.7
2.5 Banking Sector’s Net Non-Monetary Liabilities 18901.6 -147.8
2.5.1 Net Non-Monetary Liabilities of RBI 9193.5 107.2

In Sources,

  • We see decline in Commercial Banks credit to commercial sector (Rs 60720 Cr)
  • Decline in Net  Non-Monetary Liabilities in Banks but rise in RBI.
  • There is a marginal rise in Forex Assets as well.

The changes in Liabilities of RBI and Components of Money Supply will be watched with lot of interest in coming days..

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