3.10 Table 3.3 shows the trends in the components as well as sources of reserve money. On the side of components, the decline in reserve money reflected the impact of CRR reduction effected in May 1999 and November 1999 whereas on the side of sources of reserve money growth this is explained by the decline in RBI credit to banks and commercial sector, which outweighed the relatively lower growth in net RBI credit to Government. However, seasonal factors tend to raise the currency-deposit ratio in the second half of the financial year. CRR reductions on M3 growth is likely to be moderated by higher currency deposit ratio in the latter part of 1999-2000. All figures are provisional.
All figures are provisional.
Data for RBI relate to March 31 after closure of Government Accounts. Variations in respect of scheduled commercial banks are based on data for last reporting Friday of March. The revision is in respect of pension and provident funds with commercial banks which are classified as other demand and time liabilities and includes those banks which have reported such changes so far. If a bank sells foreign currency to the RBI, net foreign currency assets of the RBI go up, with an equivalent increase in r upee value of reser ve money. If the RBI sterilises the additional liquidity created by the purchase of foreign currency from the banks by selling Government securities from its portfolio, then this would not have any impact on reserve money and hence on money supply.