Money supply, credit growth remain elevated

Money supply expanded at the fastest pace in eight and a half years during the fortnight ended March 16, the Reserve Bank of India (RBI) said on Friday.

The M3 measure of money supply grew by 22% in the two weeks to March 16 from a year earlier, compared with 22.1% in the previous two weeks, the central bank said in a statement.

M3, which mainly comprises currency in public circulation, bank deposits and money invested in other saving plans, stood at Rs32.06 trillion on March 16.

Money supply has expanded at an average rate of 19.3% since April 1, 2006. This is more than the 15% growth targeted by the RBI for the fiscal year 2006-07.

During the fortnight ended March 16, the annual growth in non-food credit of scheduled commercial banks (SCBs) was 29.5% as against 32.7% a year ago.

Banks' total loans increased by Rs205.5bn in the period under review, taking outstanding advances to Rs18.7 trillion, the RBI said.

While non-food credit to industry and consumers was up by an additional Rs197.05bn, food credit rose by Rs8.5bn, the RBI said.

Meanwhile, total deposits rose by 24.8%, or Rs5 trillion, in the same period to Rs25.04 trillion.