Mubai, Jan 28 (UNI) The growth in broad money (M3) on a year on year basis ws 22.2 per cent on January four at Rs 6,86,925 crore compared to 20.8 per cent growth (Rs.5,26,566 crore), witnessed a year ago.
RBI, in its 'Macroeconomic and Monetary Developments: Third Quarter Review 2007-08' released on the eve of the third quarter review of the annual policy statement for 2007-08, said the aggregate deposits of banks, year-on-year, increased by 23.8 per cent (Rs.6,17,035 crore) on January 4, 2008 as compared with 21.5 percent (Rs. 4,59,021 crore) a year ago.
The RBI said growth in bank credit moderated after the strong pace in the preceding three years. Non-food credit by scheduled commercial banks (SCBs) moderated to 22.2 per cent (Rs.3,82,155 crore), as on January 4, 2008 from 31.9 per cent (Rs 4,16,418 crore) a year ago.
Reserve money expanded by 30.6 per cent, y-o-y, as on January 18, 2008 as compared with 20.0 per cent a year ago. Adjusted for the first round impact of the hike in the cash reserve ratio, reserve money growth was 21.5 per cent as compared with 17.5 per cent a year ago.
The Apex bank said liquidity conditions continued to be influenced by movements in capital flows and cash balances of the Governments. The Reserve Bank continued with the policy of active management of liquidity through increase in the cash reserve ratio (CRR), issuances of securities under the market stabilisation scheme (MSS) and operations under liquidity adjustment facility (LAF).
During the third quarter of 2007-08, international financial markets remained volatile as uncertainties about the US sub-prime mortgage market and other credit markets exposures persisted.
Indian financial markets remained generally orderly for the most part of the third quarter of 2007-08 except for some volatility in the equity market. Swings in cash balances of the Government and capital flows were the main drivers of liquidity conditions in the financial markets.
Interest rates in the overnight money markets mostly remained within the informal corridor set by reverse repo and repo rates during the third quarter of 2007-08. Interest rates in the collateralised segment of the overnight money market hardened but remained below the call rate during the quarter.
In the foreign exchange market, the Indian rupee generally appreciated during the quarter vis-a-vis all major currencies (US dollar, Euro, Pound sterling and Japanese yen). Yields in the Government securities market remained range-bound, partly reflecting global trends in yields. Yields softened beginning in the first week of January 2008. The 10-year yield moved in a range of 7.42-8.32 per cent during 2007-08 (up to January 23, 2008).
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