Currency with the public continues to swell reaching 18.7% YoY in line with lockdown extension.
Published fortnightly by the Reserve Bank of India (RBI) and updated by IMA by the last fortnight of every month. Money stock position as on May 22, 2020. (Updated on June 19, 2020)
Brief Overview
In India, the measures and definition of money stock have continuously evolved since independence (1947). The First Working Group 1961 (FWG) of RBI for the first time threw some light on the concept of money supply in India emphasizing the role of money as a liquid asset and a medium of exchange.
In India, the measures and definition of money stock have continuously evolved since independence (1947). The First Working Group 1961 (FWG) of RBI for the first time threw some light on the concept of money supply in India emphasizing the role of money as a liquid asset and a medium of exchange.
Later on, in 1977 the Second Working Group (SWG) of RBI developed four measures of money stock M1, M2, M3, and M4. However, with the advent of new financial institutions, the Third Working Group (TWG) felt the need for a broader measure of money supply and redefined financial institutions to include banking sector, insurance corporations, mutual funds, non-banking financial companies (NBFCs) accepting deposits from the public and development financial institutions (DFIs). Consequently, TWG broadened the scope of the measure of the money stock. For more information on the evolution of methodology of the compilation of money stock measures, please visit this link.
March 2006 witnessed an unprecedented growth in demand deposits with banks (42% YoY) and a substantial growth in the money supply (21.1% YoY). The growth in deposits, credit and money supply went beyond the RBI's projections signalling a caution. This forced the then RBI governor Y. Venugopal Reddy to increase the reverse repo and the repo rate to 6% and 7%, respectively.
RBI compiles and publishes data on M1, M2, M3, and the M4 measure of money supply fortnightly and uses M3 as the official measure of the money supply.
For more information please visit the official government website.
Next Release Date: June 26th, 2020
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