ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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MONEY AND BANKING-Sluggish Monetary Expansion

Sluggish Monetary Expansion falling trend in bank deposits together with RBI's directive to banks to keep the incremental non-food credit-deposit ratio at 60 per cent has forced the latter to keep a strict vigil on their lending portfolio during the year. Hence the expansion of bank credit during the first seven months of the year was very much subdued at Rs 5,346 crore as against Rs 8,589 crore last year. There was a sharp rise in food procurement credit by Rs 1,773 crore during the period as against Rs 296 crore during the comparable period of last year. Addition to the banks' investment in government securities at Rs 9,125 crore or 14.2 per cent during the review period was higher than Rs 7,141 crore or 13.1 per cent last year, reflecting the higher Statutory Liquidity Ratio The non-food credit expansion of Rs 3,573 crore or 3.6 per cent was meagre as compared to Rs 8,353 crore or 9.9 per cent of last year. The resultant incremental non-food credit-deposit ratio was only 24.8 per cent during the year (as compared to 50.6 per cent last year) and was less than half the norm of 60 per cent fixed by the Reserve Bank of India Cash-Deposit Ratio is defined as the ratio of cash in hand and balance with RBI to aggregate deposit. First seven months of the respective fiscal years.

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