Deferred Payment Extended by IDBI

November 12, 1966 RBI and Deficit Financing AT A PRESS INTERVIEW in Madras last week the Governor of the Reserve Bank, P C Bhatta- charya, warned the Government against further doses of deficit financing, which has already amounted to Rs 200 crores during the present financial year. The irony of it is that the monetary policy of the Reserve Bank, of which the Governor is the main architect, cannot be absolved of the blame for this level of deficit financing. The figure of deficit financing which he has mentioned obviously does not represent Central and State government borrowings from the Reserve Bank. It is evident from the money supply data in the "Reserve Bank Bulletin" that upto August-end net RBI credit to Government actually declined by Rs 45 crores. What the Governor has in mind is the expansion of Rs 263 crores in commercial bank credit to the Government less the contraction of Rs 45 crores in Government borrowing from the Reserve Bank giving a net deficit financing of Rs 218 crores.