JANUARY 2024

VOLUME LXXVIII NUMBER 1

Chair
Michael Debabrata Patra

Editorial Committee
Muneesh Kapur
Ajit R. Joshi
Deba Prasad Rath
Rekha Misra
Indranil Bhattacharya
Snehal Herwadkar
Pankaj Kumar
Tushar Baran Das
V. Dhanya
Shweta Kumari
Sujata Kundu

Editor
G. V. Nadhanael

The Reserve Bank of India Bulletin is issued

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CONTENTS

Speeches
India’s Journey from Crisis to Confidence
Shaktikanta Das 1
Insolvency & Bankruptcy Code – Towards Achieving Full Potential
Shaktikanta Das 7
Turnaround of the Indian Banking System
Shaktikanta Das 13
Innovations in Banking – The Emerging Role for Technology and AI
M. Rajeshwar Rao 21
Safeguarding Financial Stability: The Crucial
Role of Assurance Functions
Swaminathan J. 29
Resolution of Stressed Assets and IBC – the Future Road Map
Swaminathan J. 33
Building Resilient Brand India amidst Global Uncertainty
Swaminathan J. 37
Articles
State of the Economy 41
Are Food Prices the ‘True’ Core of India’s Inflation? 87
Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns 99
Stock-Bond Correlation and the Macroeconomy:
Evidence from India 111
Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey 121
Climate Stress Testing and Scenario Analysis:
Navigating Uncharted Waters 137
Current Statistics 147
Recent Publications 200
Supplements
Report on Trend and Progress of Banking in India 2022-23
Financial Stability Report, December 2023
SPEECHES

India’s Journey from Crisis to Confidence

Shaktikanta Das

Insolvency & Bankruptcy Code – Towards Achieving Full Potential

Shaktikanta Das

Turnaround of the Indian Banking System

Shaktikanta Das

Innovations in Banking – The Emerging Role for Technology and AI

M. Rajeshwar Rao

Safeguarding Financial Stability: The Crucial

Role of Assurance Functions
Swaminathan J.

Resolution of Stressed Assets and IBC – the Future Road Map

Swaminathan J.

Building Resilient Brand India amidst Global Uncertainty

Swaminathan J.
India’s Journey from Crisis to Confidence
India’s Journey from Crisis to
Confidence*
Shaktikanta Das
It gives me great pleasure to be here at Davos for
the annual meeting of the World Economic Forum.
While the winter outside is cold, the warmth of
coming together of eminent leaders and experts from
diverse fields more than compensates for it. These
meetings assume greater relevance when fundamental
changes are taking place in a global scale that would
potentially shape our common destiny. I thank the
Confederation of Indian Industries (CII) for giving me
this opportunity to speak at this event.
Recent information on the global macroeconomic
front has been somewhat reassuring with inflation
gradually descending closer to the target, even as
growth has held up better than expected. The odds of a
soft landing have increased and this has enthused the
financial markets. Financial conditions have eased,
and markets have scaled new highs, raising concerns
that they might be running ahead of themselves. At
this critical juncture, certain hard facts have to be
kept in mind, namely, global growth is slowing down;
geopolitical situation continues to be fragile with new
flash points and fear of supply chain disruptions;
geo-economic fragmentation remains unabated
undermining global trade; and the daunting climate
related challenges are holding their ground.
Given this global setting, I propose to speak
on the broad theme of India’s journey from crisis
to confidence. I shall first dwell upon our recent
experience in maintaining macroeconomic and
financial stability, which are the prime responsibilities
* Speech by Shri Shaktikanta Das, Governor, Reserve Bank of India -
January 17, 2024 - Delivered at an event organised by the Confederation of
Indian Industry (CII), Davos, Switzerland.
RBI Bulletin January 2024
SPEECH
of a central bank. I shall then talk about the emerging
fintech space and payments ecosystem that have
become the hallmark of India’s success in financial
innovation and inclusion. Finally, I propose to end
with some concluding remarks.
Macroeconomic Stability
Amidst an uncertain and challenging global
macroeconomic environment, the Indian economy
presents a picture of confidence, positivity and
optimism. Recent growth outturns have surprised
most forecasts on the upside. After clocking real gross
domestic product (GDP) growth of 7.2 per cent in
2022-23, real GDP is expected to grow by 7.3 per cent
during 2023-24 according to the latest release by the
National Statistical Office (NSO). With strong domestic
demand conditions, India remains the fastest growing
major economy and is now the fifth largest economy
in the world. In fact, in purchasing power parity (PPP)
terms, India is already the third largest economy. The
International Monetary Fund (IMF) has projected
that India’s contribution to world growth will rise
from the current 16 per cent to 18 per cent by 2028.
Strong domestic demand remains the main driver of
growth, although there has been a significant increase
in Indian economy’s global integration through trade
and financial channels. Higher reliance on domestic
demand cushioned India from multiple external
headwinds.
We have emerged from the recent spate of shocks
with stronger fundamentals – inflation is easing;
bank and corporate balance sheets are stronger than
before; fiscal consolidation is on course and its
quality has improved; and the external balances are
eminently manageable with strong forex reserves.
The decisive and timely monetary policy actions of
the Reserve Bank of India through appropriate policy
rate and liquidity measures helped India’s quick and
sustained recovery. Added to this, the structural
reforms undertaken by the government over the
1
SPEECH
last few years in the field of taxation, banking,
ease of doing business, manufacturing, inflation
management, digitalisation coupled with a clear focus
on physical and digital infrastructure have boosted
the medium and long-term growth potential of the
economy. These reforms are continuously helping the
Indian businesses to improve productivity and adopt
technology driven changes across the spectrum. The
manufacturing sector1 is undergoing a marked shift
with support from the production linked incentives
(PLIs) scheme. Services sector, which contributes the
largest share to total value addition in the economy, is
fast adopting new technologies to improve delivery,
reach, and competitiveness. The external demand for
India’s services is surging and diversifying rapidly
from information technology related services to other
professional services like business development,
research and development, professional management,
accountancy and legal services on the back of rising
competitiveness.
Headline inflation has substantially eased from
its highly elevated level of the summer of 2022. This
disinflation is underpinned by steady moderation in
CPI core (excluding food and fuel group) inflation.
There is easing of price momentum across core goods
and services. This would show that our monetary
policy action of increasing the repo rate by 250 basis
points between May 2022 and February 2023, together
with rebalancing of liquidity, is working. Even as the
cost-push pressures induced by high commodity
prices and supply-side shocks have eased, adverse
transitory food price shocks with their increasing
incidence and intensity, are imparting considerable
volatility to headline inflation. Pro-active supply
side interventions by the government have played a
significant role to mitigate the impact of food price
1 Based on first advance estimates (FAE) for 2023-24 released by NSO,
manufacturing sector has a share of 17.7 per cent in GDP, while services
sector has a share of 63.3 per cent in GDP.
2 RBI Bulletin January 2024
India’s Journey from Crisis to Confidence
shocks. Going forward, the inflation outlook would be
considerably influenced by food prices, which remain
uncertain. Recurring food price shocks could lead to de-
anchoring of inflation expectations and generalisation
of price pressures. Monetary policy, amidst these
uncertainties, needs to be alert and remain actively
disinflationary to steer inflation towards the target
rate of 4 per cent on a durable basis. Needless to add
that a stable inflation will provide the bedrock to
India’s growth ambitions.
Turning to the outlook on inflation and growth
for the next financial year (2024-25), our research
teams are in the process of making a comprehensive
assessment for our forthcoming February 2024
monetary policy. At this stage, our expectation is that
the CPI inflation will average around 4.5 per cent in FY
2024-25. As regards growth, my sense is that the GDP
growth in India will touch 7 per cent in FY 2024-25. I
am saying this on the basis of strong momentum of
economic activity seen in India. Consequently, growth
would be 7 per cent and above for four consecutive
years starting from FY 2021-22.
Financial Stability
Let me now turn to financial stability. A stable and
efficient financial system is pivotal in safeguarding
monetary stability; meeting the financing needs of
the economy; protecting depositors and investors
interests; and achieving sustainable economic growth.
The banking sector is now characterised by robust
earnings, strong buffers, renewed focus on governance
and strengthening of balance sheets. This has been
possible due to the efforts of the banks under the
overarching, prudent and proactive financial sector
policies adopted by the Reserve Bank of India. Overall,
the Indian banking sector has seen a remarkable
turnaround in the recent period. The Reserve Bank’s
focus is not just on mere compliance with the
regulatory parameters but on genuine strengthening
of the internal defences of the banking system which
India’s Journey from Crisis to Confidence
has stood us in good stead as can be seen from the
latest performance indicators.2
The non-banking financial companies (NBFC)
sector is also reflecting sound performance
parameters.3 Improved balance sheets of financial
institutions are providing good support to durable and
broad-based credit growth. Moreover, macro stress
tests undertaken to assess the resilience of banks
under adverse stress scenarios show that their capital
ratios will remain sufficiently above the regulatory
minimum.4 Rapid growth in retail loans, especially
unsecured credit, and growing interconnectedness
between banks and NBFCs, however, necessitated
the Reserve Bank to take pre-emptive policy actions
to prevent potential build-up of risks and safeguard
financial stability.5
The recent developments in the banking
system of some advanced countries drive home
the importance of ensuring prudent asset liability
management; robust risk management; sustainable
growth in liabilities and assets; undertaking periodic
stress tests; and building up capital buffers for any
2 The capital to risk weighted assets ratio (CRAR) of the banking system
at 16.8 per cent remains sufficiently above the regulatory minimum, while
profitability has grown to multidecadal highs. The return on assets and
return on equity of the banking system are at 1.3 per cent and 13.7 per
cent, respectively. Asset quality has further improved with gross non-
performing assets (GNPA) ratio and net non-performing assets (NNPA)
ratio falling to multiyear lows of 3.3 per cent and 0.8 per cent, respectively.
3 market intervention by the central bank, more so
The CRAR of NBFCs at 27.6 per cent in September 2023 remains well
above the regulatory minimum of 15 per cent; the GNPA ratio has declined
from a high of 7.2 per cent in December 2021 to 4.3 per cent in September
2023; and NIM and RoA stood at 5.1 per cent and 2.8 per cent, respectively,
in September 2023.
4 For instance, if a 250 basis points (the cumulative rate hike between May
2022-February 2023) parallel upward shift in the yield curve is applied, the
mark-to-market impact on the held to maturity (HTM) portfolio of banks
would reduce the system level capital to risk weighted assets ratio (CRAR)
from 16.6 per cent to 13.1 per cent in September 2023. A similar shock on
the trading portfolio would reduce the CRAR to 15.6 per cent. Under both
instances, however, the CRAR will remain above the regulatory minimum.
5 Considering the persistent credit growth in certain segments of retail
credit, pre-emptive measures were announced on November 16, 2023 to
sober down undue exuberance which was clearly visible. Risk weights
on certain segments of consumer credit were enhanced by 25 percentage
points. The issue of interconnectedness through bank lending to NBFCs
has also been addressed through higher risk weights.
RBI Bulletin January 2024
SPEECH
unanticipated future stress.6 The Reserve Bank has
applied a judicious mix of micro and macroprudential
measures to strengthen financial stability and support
growth in the real economy.7
The Reserve Bank has overhauled the regulatory
architecture of Banks, NBFCs, Urban Cooperative
Banks and other segments of the financial ecosystem.
Steps have also been taken for mitigating cyber
security risks and enhancing operational resilience of
the regulated entities Our approach has been to ensure
that innovation is assimilated in the financial system
in a non-disruptive manner while simultaneously
ensuring appropriate customer protection.
In parallel, we have made a paradigm shift in the
Reserve Bank’s supervision of the financial sector. The
thrust has shifted towards early identification and
remediation of risk factors by identifying root causes
of vulnerabilities and triggering timely intervention
before such factors culminate into distress. The
systems have been recalibrated to be more proactive
and forward-looking and to smell a distress early.
A key component of financial stability is to have a
currency that is stable and appreciates or depreciates
in an orderly manner. Various stakeholders in the
economy including businesses, investors and, above
all, the people stand to benefit from a stable currency.
Excessive volatility has to be checked through
6 In India, risk management measures are in place which allow banks
to provide for interest rate risk with the upturn of the interest rate cycle.
Sufficient levels of investment fluctuation reserves (IFR) – where banks
transfer net profit on sale of investment until it reaches at least 2 per cent
of the held-for-trading (HFT) and available for sale (AFS) portfolios – create
necessary buffers for banks. Moreover, all commercial banks in India,
irrespective of size, are subject to liquidity coverage ratio (LCR) guidelines
which have stringent requirements for unsecured wholesale funding. The
valuation guidelines on available for sale (AFS) category of investment are
stringent and follow a conservative approach.
7 We have issued guidelines for large exposure framework, scale-based
regulation for non-banking finance companies, and digital lending norms
for supervised entities. We also make use of the other conventional
measures such as sectoral risk weights, provisioning norms, loan to value
ratio, among others, as macroprudential tools flexibly to address the
occasional risks that are observed.
3
SPEECH
in an emerging market economy (EME). The Indian
rupee is a freely floating currency and its exchange
rate is market determined. Its relative stability in the
recent period is an outcome of the strength of the
Indian economy, its macroeconomic fundamentals
and improvements in India’s external position,
particularly the significant moderation in the current
account deficit (CAD) and revival of capital flows on
the back of comfortable foreign exchange reserves.
Labelling the Indian rupee in any other manner
by cherry-picking time periods for analysis is not
appropriate and grossly inconsistent with reality.
During the recent period of heightened
uncertainty, the emerging market economies (EMEs)
were at the receiving end of excess volatility in
US dollar and bond yields. In view of the systemic
importance of the US economy in the global financial
system, spillovers from these fluctuations are not
unexpected, especially in the context of shifting
expectations about the monetary policy trajectory in
the US and its own fundamentals. In such a situation,
the EMEs, which have their own domestic dynamics
and challenges, cannot afford to be held hostage by
international financial cycles. EMEs have to act to
safeguard their own interest. We agree that there
should be flexibility in exchange rates, but it should not
be a destabilising influence on the domestic economy
of EMEs. Accordingly, multilateral institutions would
do well to take a more nuanced and balanced view of
the policy perspectives of the EMEs.
Overall, domestic macroeconomic and systemic
risks in India have declined and the improving
balance sheets of financial institutions, together with
prudent policies of the regulators, have strengthened
the resilience of the financial system.
Fintech and Payments Ecosystem
There are several aspects of the Indian economy
which are reflecting a lot of promise. I have chosen
one area which merits greater attention, namely, the
FinTech and the Payments Ecosystem.
4 RBI Bulletin January 2024
India’s Journey from Crisis to Confidence
The FinTech ecosystem in India has tremendously
improved the delivery of financial services by making
them faster, cheaper, efficient and more accessible.
India is currently the world’s third largest FinTech
ecosystem in terms of the number of FinTech entities
operating in India. The adoption rate of FinTech in
India is 87 per cent, which is well above the global
average of 67 per cent. India’s FinTech market is
projected to reach USD 150 billion by 2025, a significant
leap from USD 50 billion in 2021.8 The JAM trinity –
a combination of bank accounts (Jan Dhan); Aadhaar
(India’s biometric identity system that provides a
single and portable proof of identity); and Mobile
phone numbers – has revolutionised India’s FinTech
ecosystem in terms of financial inclusion, digitisation
of financial services, and overall service delivery.
The indigenously developed Unified Payments
Interface (UPI) has been the game changer. Its
success story has, in fact, become an international
model. The interoperability of UPI across banks
has created a unified payment ecosystem. Its user-
friendly interface and QR code-based payments
have made it very popular. It has facilitated digital
payments for small businesses and street vendors,
leading to greater financial inclusion. The success is
visible with more than 12 billion transactions carried
out through UPI in December 2023. Various recent
enhancements to UPI like ‘Conversational Payments’
backed by an artificial intelligence powered system;
offline transactions; and linkage of credit lines to UPI
would further enhance its versatility. At the same
time ‘UPI One World’ provides foreign nationals
visiting India to transact payments through the UPI.
The linkage between India’s UPI and Singapore’s
PayNow bears testimony to the resilience of UPI as
a potential global fast payment system. The journey
continues as we have signed up MoUs with a few
other countries to tap the benefits offered by UPI.
8 https://www.investindia.gov.in/sector/bfsi-FinTech-financial-services.
India’s Journey from Crisis to Confidence
With 24x7 operationalisation of retail as well as
large value payment system operated by the Reserve
Bank, India is part of a club of select countries
providing such round the clock facilities with real
time gross settlement (RTGS). With such availability,
more than 485 million digital payments happen every
day. This phenomenal growth of digital payments
is reflected in the Reserve Bank’s composite Digital
Payment Index which has increased almost four-fold
in the last 5 years.9
The Reserve Bank has taken several other
initiatives to promote innovation. In 2019, the
innovative Regulatory Sandbox framework was
introduced. It allows live testing of financial products
or services within a controlled environment. One of its
notable successes is UPI123Pay, which enables offline
UPI payments. The Regulatory Sandbox framework
has been made interoperable in 2023 across multiple
regulators. The annual Global hackathon, HaRBInger,
organised by the Reserve Bank and the Innovation
Hub set up by the Reserve Bank further amplify our
collaborative efforts with the private sector in the
pursuit of innovation.
As a step towards greater digitalisation, the pilot
for our Central Bank Digital Currency (CBDC), e-Rupee,
was launched in both wholesale and retail segments
in November-December, 2022. Since then, 4 million
9 The RBI’s composite Digital Payment Index has increased to 395.6 in
March 2023 up from 100 as of March 2018.
RBI Bulletin January 2024
SPEECH
customers have been onboarded. The CBDC will
enhance digital transactions, especially in areas with
limited internet connectivity. We expect our CBDC
(e-Rupee) to become a global trendsetter and facilitate
seamless cross-border payments.
Our approach to FinTech ecosystem is customer-
centric, with focus on ensuring effective oversight,
ethical conduct, risk management, and encouraging
self-regulation by the FinTechs themselves by
establishing a Self-Regulatory Organisation (SRO).
Conclusion
The global economy is confronted with multiple
challenges. There is a dire need for collective and
coordinated action by all stakeholders and global
agencies. I am sure the discussions in Davos will
energise the spirit of cooperation and guide us to a
better future.
As far as the Indian economy is concerned,
it is now poised for a long haul of higher growth.
There are challenges, but they have to be dealt with
effectively. With a confluence of factors in its favour,
the confidence on India’s prospects is at an all-time
high. We have to make this happen in reality. All
stakeholders need to be unambiguously focused and
take measures to support this journey.
Thank you. Namaskar
5
Insolvency & Bankruptcy Code – Towards Achieving Full Potential
Insolvency & Bankruptcy Code
– Towards Achieving Full
Potential*
Shaktikanta Das
I am very happy to be here at this Conference on
Insolvency and Bankruptcy Code (IBC), 2016 organised
by the Centre for Advanced Financial Research and
Learning (CAFRAL). I wish to congratulate CAFRAL for
taking this initiative and thank them for inviting me
to this event.
Internationally, bankruptcy laws serve a
larger public cause of providing an avenue for
recycling of capital tied up in inefficient firms and
realigning the deployment of this capital in other
productive purposes. The bankruptcy laws promote
entrepreneurship in the economy; they also provide
means for distressed borrowers to renegotiate their
debt with the creditors; and creditors to exercise their
rights over borrowers in default.
In the Indian context, as you would be aware, our
credit markets are dominated by banks. The stressed
debt held by the banks is usually an outcome of
anticipated as well as unanticipated risks that have
manifested. Wilful default or frauds are, however, a
separate category. At a systemic level, a high level of
stressed debt is generally caused by excessive leverage,
poor underwriting, lax post disbursement surveillance
and other exogenous shocks that may emerge from
the real economy. Recent economic history has shown
how the above factors have contributed to high level
of stressed debt in various geographies. Even in the
* Keynote Address by Shri Shaktikanta Das, Governor, Reserve Bank of
India - January 11, 2024 - At the Conference on Resolution of Stressed
Assets and Insolvency and Bankruptcy Code (IBC) organised by the Centre
for Advanced Financial Learning (CAFRAL), Mumbai.
RBI Bulletin January 2024
SPEECH
Indian context, we had witnessed a huge pile up
of stressed assets about a decade ago. High level of
stressed debt generates major adverse consequences
in the credit system by way of misutilisation of
capital, averseness to lending and crowding out of
investments.
Seen from this perspective, the enactment
of the Insolvency and Bankruptcy Code (IBC) has
been a landmark reform in the economic history
of India. Prior to IBC, the laws in India had brought
the legislative, executive or judicial arms of the
Constitution, into dealing with the distressed firms, in
isolated manners. In this background, the Bankruptcy
Law Reforms Committee (BLRC)1 had strongly opined
that the appropriate resolution of a defaulting firm
is a business decision, and only the creditors should
make it. As a culmination of this thinking, the IBC
as we have it today lays substantial emphasis on
resolution mechanisms driven by creditors who have
been empowered to initiate insolvency proceedings
against a defaulting debtor. Such a process facilitates
greater transparency and accountability.
The Reserve Bank, being the regulator of a large
part of the credit ecosystem, has been a key stakeholder
in the implementation of the IBC. The RBI has taken
several measures dovetailed into the IBC, with a focus
to resolve large value stressed accounts. The RBI was
conferred with an explicit role in leveraging the IBC as
the primary tool for resolution of large legacy stressed
assets. The amendments to the Banking Regulation
Act, 1949 carried out in 2017 inserted a clause that
authorised the Reserve Bank to issue directions to
any bank to initiate corporate insolvency resolution
process (CIRP) in respect of a default, under the
provisions of the IBC. Accordingly, leveraging these
powers, the Reserve Bank issued directions for
1 The Report of the Bankruptcy Law Reforms Committee (Chairperson:
Dr. T K Viswanathan) - Volume I: Rationale and Design, November 2015.
7
SPEECH
initiation of CIRP proceedings in 41 specific cases of
default2.
The other significant implication of the IBC
from a regulatory perspective was a shift towards a
more principle-based approach as far as out of court
resolution is concerned. All existing schemes of
restructuring of loans were substituted by a simple
and harmonised framework for resolution under
the Prudential Framework which was issued by
the Reserve Bank on June 7, 2019. The harmonised
framework provided discretion to lenders for
designing and implementing resolution plans in
respect of borrowers in default, subject to evaluation
of commercial viability. The resolution plan could
also include filing of CIRP applications under the
IBC. In respect of large value borrowers, i.e., where
aggregate exposure of banks is in excess of `1500
crore, disincentives have been prescribed in the
form of additional provisions to be made for delayed
implementation of resolution plans. Several of these
accounts have since been resolved under the IBC.
Stocktaking of the implementation of the IBC
If we have to take stock of the implementation
journey of the IBC and its impact so far, there are
significant positive indications as well as learnings,
suggesting the need for some course correction. Let
me first highlight the positive aspects in terms of (i)
nature of resolution; (ii) realisation of value; and (iii)
behavioural shift.
In terms of nature of resolution: Since its
inception, 7,058 corporate debtors (CDs)3 have been
admitted into the CIRP, of which 5,057 cases have been
2 RBI had issued directions to banks in June 2017, to initiate insolvency
proceedings under IBC against 12 of the largest Corporate Debtors
classified as non-performing asset at that point in time. This was followed
up with a second set of directions in August 2017, requiring banks to
implement resolution plans, in respect of 29 other stressed Corporate
Debtors by December 13, 2017, failing which insolvency proceedings had
to be initiated against them.
3 for resolution of stressed entities. I am referring to
Data compiled from IBBI Quarterly Newsletter for July-September’
2023.
8 RBI Bulletin January 2024
Insolvency & Bankruptcy Code – Towards Achieving Full Potential
closed and 2,001 corporate debtors are under various
stages of resolution. Of the cases which have been
closed, around 16 per cent have yielded successful
resolution plans; 19 per cent have been withdrawn
under Sec 12A of IBC, where largely the debtors agreed
for full or partial settlement with the creditors; 21
per cent were closed on appeal or review; and in 44
per cent of the cases, liquidation orders have been
passed. Putting together the 16 per cent cases which
had successful resolution plans and the 19 per cent of
cases where the CDs agreed for settlement, it can be
said that 35 per cent of the total CIRP cases saw the
positive impact of the IBC.
A fine combing of the data would indicate that
77 per cent of the cases which ended in liquidation
were inherited from the earlier Board for Industrial
and Financial Reconstruction (BIFR) regime or were
already defunct units where substantial value erosion
had taken place before their admission under IBC. In
fact, the Code has provided all these legacy cases a
means for an orderly exit. To illustrate further, 38 per
cent of the CIRPs which yielded a successful resolution
were earlier with the BIFR and/or were defunct; and if
not for IBC, their fate would have perhaps remained
uncertain till now.
The data published by the IBBI suggests that
there has been an increase in the number of CIRPs
resulting in resolution as a percentage of liquidation
orders going up from 21 per cent during FY 2017-18 to
45 per cent during FY 2022-23. This reflects a steady
tilting towards resolution option under the IBC and
highlights the increased acceptance of the IBC as an
appropriate statutory umbrella for turning around
viable firms.
Even in other segments of the financial sector,
entities such as the non-banking financial companies
(NBFCs), the IBC has provided an effective enabler
section 227 of the Code, which was operationalised
Insolvency & Bankruptcy Code – Towards Achieving Full Potential
through a separate notification for resolution of
certain Financial Service Providers in 20194. The RBI
has been able to leverage this mechanism to undertake
resolution of a few major stressed NBFCs in the recent
past, with minimal disruption to the overall financial
system.
In terms of realisation of value: Creditors have
realised `3.16 lakh crore out of the admitted claims of
`9.92 lakh crore as of September 2023, which works
out to a recovery rate of 32 per cent. It needs to be
emphasised here that significant value destruction
would have already happened in these assets prior to
their admission under the IBC. Further, a comparison
of realised value with admitted claims may not be
a reasonable indicator of the effectiveness of the
resolution process. Rather, the resolution value may
be compared with the liquidation value of stressed
assets or the fair value at the time of admission into
IBC. When evaluated from the prism of these two
parameters, namely, the liquidation value and the fair
value, the realisation rates are 169 per cent and 86 per
cent respectively which appears quite encouraging.
In terms of behavioural shift: The most
interesting outcome of the IBC has been the substantial
behavioural shift ushered in by the Code. This is
evident from the 26,518 applications for initiation
of CIRPs having total underlying default of `9.33
lakh crore which were withdrawn before admission,
till August 2023. The credible ‘threat of insolvency’
ignited by the Code has strengthened the negotiating
powers of the creditors, in the absence of which it is
most likely that those defaults would have lingered
for much longer, resulting in value destruction. It has
to be stated here that the IBC should not be seen as
merely a loan recovery instrument; it has to be seen
4 In exercise of the powers conferred by section 227 of the IBC,
Government issued the notification SO. 4139(E) dated November 18,
2019, enabling resolution of non-banking finance companies (including
housing finance companies) with asset size of `500 crore or more, under
the provisions of IBC.
RBI Bulletin January 2024
SPEECH
as an instrument which facilitates preservation of
economic value of assets through effective resolution
or unlocking of capital which is stuck in unviable
businesses.
Challenges and Way Forward
If all is good about the implementation of the
Code, then where is the criticism coming from? In
general, the criticisms of the IBC are on two fronts
– the time taken for resolution and the extent of
haircuts vis-à-vis the admitted claims. I have already
shared my perspectives on the haircut part. Let me
now share some thoughts on the delay part.
The Code envisages a time bound process,
requiring the completion of CIRP within 180 days,
with a one-time extension by up to 90 days in
exceptional circumstances. The data published by the
IBBI5, however, raises certain serious concerns. As of
September 2023, 67 per cent of the ongoing CIRP cases
have already crossed the total timeline of 270 days
including possible extension period of 90 days. More
concerning is the fact that, the average time taken for
admission of a case during FY 2020-21 and FY 2021-22
stood at 468 days and 650 days respectively. Such long
degree of delays will substantially erode the value of
the assets. There are multitude of factors playing out
here, namely, the evolving jurisprudence related to
the Code; litigatory tactics adopted by some corporate
debtors; lack of effective coordination among the
creditors; bottlenecks in the judicial infrastructure,
etc. I would wish to touch upon some of these issues
along with thoughts on the possible way forward. I
have four specific points to make.
(a) Realigning the dynamics between the Creditors
and Corporate Debtors
The IBC transfers full control of the Corporate
Debtors to the creditors during the period of CIRP,
5 Insolvency and Bankruptcy Board of India (IBBI) is the regulator
established under IBC and is responsible for implementation of the Code.
9
SPEECH
through the resolution professional. The rationale for
the same is to prevent any erosion of value during the
process of resolution. Given the loss of saddle, we see
the promoters of the debtors in many cases resorting
to various litigatory tactics. While there could be
bonafide reasons in some cases, other kinds of intent
are also visible in the market. To minimise this friction,
there has been an institutional attempt towards
adopting the prepack schemes which is essentially a
debtor-in-possession model. Globally, pre-packs have
evolved organically without statutory interventions,
because in those countries, the insolvency regimes
had stabilised. In such predictable scenarios, the
judiciary’s role is rather limited because the Courts
generally approve the resolution plans after verifying
compliance with the laid down tenets.
In the Indian context, to start with, the Pre-
Packaged Insolvency Resolution Process (PPIRP) has
been rolled out for the MSMEs. The response towards
its adoption, however, seems to be relatively muted.
One reason could be the hesitancy on the part of the
financial creditors (FCs) in approving the proposals
under this mechanism, wherein the haircut is
perceived as voluntary. It may be stressed here that
PPIRP will incentivise the promoters to constructively
engage with the creditors, possibly even before
occurrence of any default event. This would facilitate
swift and smoother resolutions, avoiding unnecessary
adversarial litigations. Overall, this could be a win-
win situation for both creditors and debtors. Once
this perception is established, there could be a greater
acceptance of this mechanism for larger corporate
debtors as well, as and when the statutory enablers
are in place. Thus, in their own interest, the creditors
and debtors may consider adopting PPIRP in applicable
scenarios based on prudentially realistic cost-benefit
evaluations.
From the Reserve Bank’s side, we are cognisant
of the limitations of the out of court resolution
framework, in particular the coordination issues since
10
Insolvency & Bankruptcy Code – Towards Achieving Full Potential
a large part of the creditor universe like mutual funds,
insurance companies and other bond/debenture
holders, etc. is outside the scope of our Prudential
Framework for Resolution of Stressed Assets. Hence,
we have a special interest in effectively dovetailing the
out of court workouts conceived under our Prudential
Framework with that of the IBC. The PPIRP could be a
potential game changer in this regard.
(b) Reaffirming the financial creditor’s role
Through the course of last seven years of
implementation of the Code, the jurisprudence on the
role of the Committee of Creditors (CoC) has evolved.
The CoC has a fiduciary responsibility to safeguard
the interests of all stakeholders. The success of the
Code is linked to an active involvement of the CoC
in driving the resolution process forward. On several
occasions, however, the Adjudicating Authorities
(AA) have raised concerns regarding the conduct
of the CoC in the insolvency proceedings. This
includes lack of participation in the CoC meetings;
lack of engagement or effective coordination among
creditors; disproportionate prioritisation of individual
interest of creditors rather than their collective
interest while designing the resolution plans which
can be detrimental to the resolution plan itself, etc.
Given these shortcomings on the part of CoC,
there appears to be a trend in recent years towards
balancing the rights of Operational Creditors (OCs)
with those of Financial Creditors (FCs) under the
Code. While the focus on ensuring equity among all
stakeholders may be appreciated, there needs to be
some distinction in weightage attributed to different
category of creditors, depending upon the degree of
risk absorbed ab initio. It has to be recognised that the
financial creditors take the maximum risk and hence
their risk needs to be commensurately compensated
and with priority. Accordingly, any amendments to
the Code and its evolution thereof may continue to
lay emphasis on a financial creditor-led resolution
framework, in an overarching manner.
RBI Bulletin January 2024
Insolvency & Bankruptcy Code – Towards Achieving Full Potential
(c) Envisaging a Group Insolvency Mechanism
While the insolvency mechanism has been
graduating towards a zone of stability through various
concerted measures, one visible impediment seems
to be the absence of a clear framework for group
insolvency. Globally, there are two diverse facets of
Group Insolvency. Some jurisdictions have adopted
either procedural coordination or substantive
consolidation. Substantive consolidation pertains to
the consolidation of assets, liabilities, and operations
of multiple entities within a group, disregarding their
separate legal entity status. On the other hand, under
procedural coordination, the approach is limited to
aligning procedural aspects like filing requirements,
timelines, coordination, etc., and not mingling the
entities per se.
In the Indian context, in the absence of a specified
framework, the group insolvency mechanism has
been so far evolving under the guidance of the Courts.
Perhaps the time has come for laying down appropriate
principles in this regard through legislative changes.
There has been quite a bit of brainstorming on this
issue in the policy circles for some time now. The task
now is to move forward through appropriate legal
changes.
While a legal framework cannot envisage all
plausible real world scenarios, given the complicated
group structures at the ground level including cross
border linkages, it may be in the fitness of things to
formally conceive a framework to start with. There
would be challenges in this journey like intermingling
of assets, devising a definition of ‘Group’, addressing
cross-border aspects, etc. It would still be preferable to
see the opportunity here and put in place a workable
framework for group insolvency.
(d) Developing a vibrant secondary market for
stressed assets
One major impediment for implementing a
successful resolution plan has been the absence of a
RBI Bulletin January 2024
SPEECH
vibrant market for stressed assets in the country. This
effectively limits the pool of prospective resolution
applicants for stressed assets under IBC. In fact, this
applies to even our regulated entities when they
transfer their stressed assets outside the IBC process. A
robust secondary market in loans can be an important
mechanism for management of credit exposures by
the lending institutions.
It is in this pursuit that certain measures
have been taken by the Reserve Bank. The Master
Directions on Transfer of Loan Exposures issued
on September 24, 2021 lay down a comprehensive
regulatory framework for transfer of loan exposures
by banks, NBFCs and All India Financial Institutions
(AIFIs). In particular, an enabling framework has been
put in place for transfer of stressed loan exposures to
a wider set of market participants, subject to specified
conditions. We are also currently in the process of
formulating a framework for securitisation of stressed
assets, for which a Discussion Paper has been issued
in January, 2023.
From an institutional perspective, the Reserve
Bank has brought together a core group of major banks
to set up a Self-Regulatory Body – i.e. Secondary Loan
Market Association (SLMA). The self regulatory body is
expected to play an important role in standardisation
of documentation and market practices; setting up the
market infrastructure; promoting liquidity, efficiency
and growth of the secondary market in alignment
with broad regulatory objectives.
These measures are expected to facilitate the
transfer of credit risk originating in the banking sector
and ensure market-based credit products for diversified
set of investors. Undoubtedly, the germination of
an active secondary market ecosystem will have
consequential benefits for the IBC mechanism.
Conclusion
Apart from what I have highlighted, there are
several other aspects which merit attention. These
11
SPEECH Insolvency & Bankruptcy Code – Towards Achieving Full Potential

would include leveraging technology to optimise
the disposal of cases, strengthening the judicial
infrastructure, regular stakeholder awareness
programmes and the like. From the Reserve Bank’s
side, we have also been consistently engaging
with the stakeholders to understand their thought
process on the emerging challenges to arrive at likely
solutions.
The recent/steady improvement in the asset
quality of the banking sector can be attributed to a
multitude of factors including the introduction of
the IBC. A law is only as good as its implementation.
The Reserve Bank would continue to have focussed
interest in the orderly and sustained evolution of the
IBC ecosystem.
I thank you all for hearing me with patience.
Thank you. Namaskar!

12 RBI Bulletin January 2024

Turnaround of the Indian Banking System
Turnaround of the Indian
Banking System*
Shaktikanta Das
I am extremely delighted to be here this morning
at the Mint BFSI Summit. I would like to thank
the organisers, Mint, for inviting me to this event.
Incidentally, I had also participated in a similar event
- Mint Annual Banking Conclave - in February 2020.
Not very long ago, the Indian banking sector was
beset with a host of issues. Indian banks were weighed
down by high levels of non-performing assets (NPAs),1
while the returns on assets and equity were in negative
zone. Eleven banks were under Prompt Corrective
Action (PCA) as at end-June 2018.2 Failure of a major
Non-Banking Financial Company (NBFC) stoked fear
and risk aversion among market participants leading
to increased costs of market borrowing, especially
for those with perceived asset-liability mismatch
concerns. Even as we were coping up with the stress
in the financial sector, the COVID-19 pandemic in the
beginning of the year 2020 came as a shocker, which
led to major disruptions across all sectors.
During the last five years, the Reserve Bank
took a series of initiatives on the regulatory and
supervisory fronts, while banks themselves, to their
credit, responded to the challenges by strengthening
their internal defence mechanisms. As a result of
these concerted efforts, there has been a gradual
and consistent turnaround in the banking system,
despite the multiple headwinds emanating from
COVID-19, geo-political conflicts and sharp monetary
* Keynote Address by Shri Shaktikanta Das, Governor, Reserve Bank of
India - January 11, 2024 - Delivered at the Mint BFSI summit, Mumbai
1 coverage ratio increasing from 81.2 per cent to 91.9 per cent during the
As on March 31, 2018, the gross non-performing assets were around
11 per cent of the gross advances, after the RBI had done an asset quality
review in 2014-15.
2 Financial Stability Report, June 2018
RBI Bulletin January 2024
SPEECH
policy tightening across the world. All key indicators
of scheduled commercial banks (SCBs), namely,
capital adequacy, asset quality and profitability
have shown improvement in the last four years.3
The credit growth has now become broad-based and
backed by the strong fundamentals of the financial
institutions. The financial indicators of non-banking
financial companies are also in line with that of
the banking system as per the latest available data.
On the whole, India’s banking sector has emerged
stronger from the unprecedented challenges of the
recent years.
Questions are often raised as to how this
turnaround in the banking sector took place. My short
answer to this question is that it is the result of all
the good work of various stakeholders in the system.
In my address today, I have chosen to speak on the
Reserve Bank’s efforts to steady the economic ship
amidst turbulent waters in the last few years. I have
structured my talk in the following manner. First, I
shall speak on our response to various crises starting
with the non-banking finance companies (NBFC)
stress that haunted us even before the pandemic.
Next, I shall dwell upon the body of work we have
undertaken in recent years to revamp our regulation
and supervision.
How We Navigated through the Crisis
In the aftermath of the Infrastructure Leasing
and Financial Services (IL&FS) crisis, the Reserve
Bank heightened its focus on maintaining and
fostering macro-financial stability through a series of
conventional and non-conventional measures. The
3 The capital adequacy of banks has increased by 181 bps from 14.8 per
cent as on March 31, 2020 to 16.6 per cent as on September 30, 2023.
The asset quality has also steadily improved with gross non-performing
assets decreasing from 8.3 per cent to 3.3 per cent and the provisioning
same period. The profitability, as reflected in the Return on Assets and
Return on Equity, too, has shown an increase of 119 bps and 1131 bps,
respectively. The liquidity coverage ratio (LCR) of SCBs was comfortable at
135.4, much above the minimum stipulation of 100.
13
SPEECH
flexibility provided in the Flexible Inflation Targeting
(FIT) framework of maintaining price stability, while
keeping in mind the objective of growth, helped us to
accommodate large supply side shocks, while focusing
on immediate growth concerns during the pandemic.
In particular, the tolerance band around the target
came handy during this period. While always keeping
an eye on the financial stability concerns, the Reserve
Bank endeavoured to ensure that the economy got
back on its feet as quickly as possible and returned to
a higher trajectory of growth. Our ultimate objective
is the mutual coexistence of price stability, sustained
growth and financial stability that works best for the
Indian economy.
Following the collapse of IL&FS in the second half
of 2018, almost the entire 2019 necessitated taking
measures to intensify the supervision of NBFCs;
monitoring their liquidity and stability conditions
more closely; infusing system liquidity through
innovative instruments like currency buy-sell swaps;
restoring market confidence through appropriate
communication and backing it up with actual action
on several fronts.4
When we envisaged that COVID-19 could be a
major disruptive factor, our response was swift and
decisive. A slew of measures was announced on March
27, 2020. They included targeted term repo operations
(TLTROs) up to `1,00,000 crore, reduction in the
cash reserve ratio (CRR) by 1 percentage point and
enhancement of access to marginal standing facility
(MSF) by the banks.5 Business continuity measures
were put in place in the Reserve Bank even before the
4 In June 2019, during the post policy press conference, the Governor had
said clearly that “…it is our endeavour to ensure that there is no collapse
of any large systemically important NBFC or any large NBFC. And, in that
direction we are monitoring the evolving situation and we will see how it
moves forward. ….”
5 Banks’ limit for borrowing overnight under the MSF by dipping into
their Statutory Liquidity Ratio (SLR) were raised to 3 per cent of NDTL
from 2 per cent which allowed them to avail an additional `1,37,000 crore
of liquidity under the LAF window.
14
Turnaround of the Indian Banking System
nation-wide lockdown was announced.6 In parallel, all
supervised entities (SEs) were advised in March 2020
to activate their existing operational and business
continuity plans and manage the risks posed by the
COVID-19 pandemic. On the monetary policy front,
the policy repo rate was reduced sizeably by 115 bps
in a span of two months (March-May 2020). Liquidity
enhancing measures equivalent to 8.7 per cent of
GDP were announced. As a result of these measures,
financial conditions got substantially eased during the
COV-19 period.
The regulatory focus was to frame appropriate
policy responses to mitigate the immediate impact
of COVID-19 on the financial institutions and their
constituents. The regulatory measures introduced
during this period could be broadly grouped into two
categories viz., measures to stabilise the economy
against the onslaught of the pandemic and measures
to support a quick recovery and durable growth in the
medium term in the post-pandemic period.
To provide immediate debt service relief to
borrowers whose income generating ability was
impaired by the lockdowns, a moratorium on
repayment of loans was provided to all eligible
borrowers, initially for a period of three months,
which was subsequently extended by another three
months, taking the total to six months from March
2020 to August 2020. Given that the borrowers
would require additional working capital financing
to tide over the crisis period, lenders were permitted
to recompute working capital requirements of the
borrower and finance accordingly. To incentivise
lenders to implement the above measures in its true
spirit, regulatory exemption was provided, in terms of
which loan moratorium and easing of working capital
financing were not treated as restructuring.
6 We were perhaps amongst the first few central banks to have set up
a special quarantine facility with about 200 officers, staff and service
providers, engaged in critical activities to ensure business continuity in
banking and financial market operations and payment systems.
RBI Bulletin January 2024
Turnaround of the Indian Banking System
Further, to facilitate revival of activity in the
real sector and to mitigate the impact on ultimate
borrowers, a window under the Resolution Framework
(1.0) was provided to lenders to implement viable
restructuring plans in respect of eligible borrowers
without asset classification downgrade. Given that a
similar experience in the past had led to some adverse
experiences, clear eligibility conditions were codified
to ensure that only borrowers impacted by the
pandemic were covered with a defined sunset clause.
Additionally, to ensure that only viable proposals
are extended the benefit, an expert committee was
constituted to recommend the required financial
parameters with sector-specific benchmark ranges for
such parameters to be part of the resolution plans.
Lending institutions were required to consider these
parameters, in combination with any other parameters
as decided by them, for evaluating the resolution
plans.
As the shocks of the second wave of COVID
-19 emerged, a similar window under Resolution
Framework 2.0 was announced for micro, small and
medium enterprises (MSMEs); retail loans; and, loans
to other small businesses as well as individuals for
business purposes, having borrowings of less than
`50 crores, with well-defined principles. The two
Resolution Frameworks were an exercise in balancing
the interests of creditors and debtors without
losing sight of the prudential and financial stability
concerns. With this background of our immediate
response to the crisis, let me now turn to our efforts
towards strengthening the regulatory and supervisory
architecture of the banking system from the long-term
perspective.
Strengthening the Regulatory Architecture
While dealing with the COVID-19 pandemic
related challenges, we announced and implemented
a series of structural measures all through this period
to strengthen our regulatory systems, shifting from
RBI Bulletin January 2024
SPEECH
an entity-based approach to more of a principle and/
or activity-based approach. These measures have
played a key role in not only averting a crisis, but
also enabling the financial sector and the economy
to emerge stronger and healthier from the multiple
crises that we experienced in the last few years.
In the recent period, the Reserve Bank has
undertaken a complete overhaul of the regulatory
architecture of the banking system. These
regulatory steps include, among other things, the
implementation of leverage ratio (June 2019)7;
large exposures framework (June 2019)8; guidelines
on appointment of directors and constitution of
committees of the board (April 2021)9; revised
guidelines on securitisation of standard assets and
transfer of loan exposures (September 2021); scale
based regulatory framework for NBFCs (October
2021)10; revised regulatory framework for Urban
Cooperative Banks (July 2022); and guidelines on
digital lending (September 2022). The capital and
liquidity requirements are uniformly applied to all
scheduled commercial banks (SCBs), irrespective
7
Keeping in view the requirements of financial stability and increased
harmonisation with Basel III standards, it was decided that the minimum
leverage ratio should be 4 per cent for Domestic Systemically Important
Banks (DSIBs) and 3.5 per cent for other banks.
8 In order to capture exposures and concentration risk more accurately
and to align the instructions with international norms, the Large Exposure
Framework was modified with notable introduction of economic
interdependence criteria in the definition of connected counterparties
and mandatory “look-through approach” in determination of relevant
counterparties in case of structured financial investments.
9 The instructions were issued to the scheduled commercial banks about
the Chair and meetings of the board; composition of certain committees
of the board; age, tenure and remuneration of directors; and appointment
of the whole-time directors (WTDs).
10
Even before these new regulatory frameworks were brought in, we
had taken measures such as issuance of guidelines on appointment of
Chief Risk Officers (CROs) (May 2019) and Chief Compliance
Officers(CCOs) in large NBFCs (April 2022); Liquidity coverage ratios
for NBFCs with asset size of `5000 crore and above (November 2019);
risk-based internal audit (RBIA) norms for large NBFCs (with asset size
of `5000 crore and above) and UCBs with asset size of `500 crore and
above (February 2021); and harmonising the guidelines on appointment
of statutory auditors for NBFCs and UCBs with that of commercial banks
(April 2021).
15
SPEECH
of their asset size and exposure.11 We nudged the
banks for achieving complete automation of income
recognition, asset classification and provisioning
processes. Notably, while the guidelines to this effect
were issued in 2011, their full implementation was
pending. Further, additional guidelines were issued in
2020 to ensure the completeness and integrity of this
process.
I would now like to highlight some of the other
facets of the Reserve Bank’s regulatory efforts. There
are six points here to which I wish to draw your
attention.
(a) Fostering a Sustainable Digital Lending Landscape
Post pandemic, digital lending has seen an
exponential rise in various emerging economies
including India. There has been an increase in scale
and velocity of digital credit. At the same time, it has
raised a host of business conduct issues. Consequently,
various regulatory dilemmas have emerged wherein a
balanced approach had to be taken. It was necessary to
weigh the customer benefits brought in by innovative
business models of FinTechs on one side and the
emerging business conduct and regulatory concerns
on the other.
The outcome of the Reserve Bank’s regulatory
balance was reflected in the digital lending guidelines
issued in September 2022, followed by the guidelines
on First Loss Default Guarantee (FLDG) in June 2023,
covering prudential concerns and other salient facets
of outsourcing, business conduct, data privacy and
digital lending operation. The regulatory objective was
to rein in the negative externalities while retaining
the salutary effects of innovative digital business
models. The data on private equity flows into the
digital lending space after the issuance of these
11 All SCBs are required to maintain capital to risk weighted asset ratio
(inclusive of capital conservation buffer) at 11.5 per cent, LCR at 100 per
cent and NSFR of 100 per cent.
16
Turnaround of the Indian Banking System
guidelines demonstrates the faith of investors on the
Indian digital lending story and the belief that, going
forward, digital lending under the regulatory gaze of
the Reserve Bank will spur the FinTech sector even
more. In furtherance of this objective and as a part of
our efforts to accelerate and widen the reach of digital
banking services, the concept of “Digital Banking
Units” (DBUs) was also introduced.12
(b) Firming Up Governance in Regulated Entities
Our focus in recent years has been on
strengthening the governance and assurance
functions in the regulated entities – banks and non-
bank financial companies (NBFCs) – to enhance their
internal lines of defence. The emphasis has been on
building an environment of trust, transparency and
accountability in the financial sector. The assurance
functions, namely, risk management, compliance and
internal audit are critical links between governance
and business. The key is to identify risks early,
monitor them closely and manage them effectively.
In this context, instilling an appropriate risk culture
in the organisation is important. This needs to be
driven by the Board and senior management with
effective accountability at all levels. We expect the
senior management, the Board of Directors, the
Audit and Risk Management Committees and the
Internal Audit function in banks to play a more
proactive role and be more watchful of incipient and
emerging risks. The Reserve Bank has issued detailed
guidelines for ensuring quality and independence
of the governance and assurance functions. These
areas are also subjected to intensive supervisory
assessment.
12 DBU is a specialised fixed point business unit / hub housing certain
minimum digital infrastructure for delivering digital banking products &
services as well as servicing existing financial products & services digitally,
in both self-service and assisted mode, to enable customers to have cost-
effective/ convenient access and enhanced digital experience to/ of such
products and services in an efficient, paperless, secured and connected
environment with most services being available in self-service mode at
any time, all year round.
RBI Bulletin January 2024
Turnaround of the Indian Banking System
(c) Reimagining Regulations with a Pro-Customer
Perspective
We have given renewed focus on strengthening
the conduct related aspects. Instructions have been
issued on the responsibilities of regulated entities
to ensure avoidance of intimidation or harassment
of customers by their recovery agents. The Master
Directions on issuance of cards have strengthened the
conduct regulations relating to various aspects of card
operations.13
We have also addressed the issue of quick
resolution of customer grievances by regulated
entities. Accordingly, the Reserve Bank Integrated
Ombudsman Scheme (RB-IOS) has been introduced
and implemented. This is a one-stop, cost-free touch
point for redressing customer grievances pertaining to
certain key segments of the Reserve Bank’s regulated
entitities. The scheme envisages a grievance redress
mechanism with powers to provide personal hearing,
compensation and an in-built appellate mechanism.
Importantly, the non-banking finance companies and
credit information companies have also been brought
under the ambit of the integrated ombudsman
scheme, in addition to banks.
(d) Sustainable Finance Initiatives
Given the significant challenges from climate
risks, a dedicated Sustainable Finance Group has been
institutionalised in the Reserve Bank. Besides actively
participating in dialogues with various stakeholders at
international and domestic levels, the focus has been
to kindle brainstorming among regulated entities to
internally review their systems, processes, policies
and oversight towards sustainable finance and the
way forward.
13 These include closure of a credit card account, issuance of credit card
for business purpose, billing issues, refund of credit transactions, new
form factors, issues relating to co-branded arrangement, mis-selling, etc.
Instructions have also been issued to ensure responsible lending conduct
in terms of pricing and resetting pricing for loan related products, return
of loan related security documents, addressing customer grievances
related to reporting of credit scoring, etc.
RBI Bulletin January 2024
SPEECH
(e) Measures to Develop Credit Market
In order to facilitate development of a robust
market in credit risk transfer and greater investor
participation in stressed loans, the Reserve Bank has
put in place a regulatory framework in the form of
guidelines on ‘Securitisation of Standard Assets’ and
‘Transfer of Loan Exposures’ (2021). Subsequently,
a Discussion Paper has been issued on Framework
for Securitising Stressed Assets, the final contours
of which are now being formulated. A core group of
major banks has also been brought together to set
up a self-regulatory body – Secondary Loan Market
Association (SLMA). This body will play a major role
in standardisation of documentation and market
practices; setting up of the market infrastructure;
and promoting growth, liquidity and efficiency of the
secondary market in alignment with broad regulatory
objectives.
(f) Macro Prudential Measures
While we continue with our endeavour towards
reorienting the financial system, our focus on broader
systemic stability and addressing incipient signs of
imprudent practices also continues. Considering
the persistent credit growth in certain segments of
retail credit, pre-emptive measures were announced
in November 2023 to sober down undue exuberance
which was clearly visible. Risk weights on certain
segments of consumer credit have, therefore, been
enhanced. The issue of interconnectedness through
bank lending to NBFCs has also been addressed
through higher risk weights. More recently, concerns
on ever-greening on account of regulatory arbitrage
between lenders and the alternative credit channels –
Alternative investment Funds (AIFs) – have similarly
been addressed (December 2023).
Revamping the Reserve Bank’s Supervisory Processes
Structural changes have also been implemented to
enhance the agility, flexibility, and specialisation of our
supervisory structure. The Reserve Bank’s supervisory
17
SPEECH
systems have been recalibrated to attune them to the
dynamics of the financial sector in a forward-looking
approach so as to smell possible distresses early. The
emphasis is on fostering resilience in the supervised
entities (SEs) at three levels - financial, operational
and organisational. Needless to say, it is a constantly
evolving process, but it has been made more dynamic.
In this context, I propose to highlight five aspects.
(a) Unification of Regulatory and Supervisory arms
A unified and harmonised supervisory approach
has been institutionalised in the Reserve Bank for
commercial banks, Non-Banking Financial Companies
(NBFCs) and urban cooperative banks (UCBs).
The emphasis is on identifying the root causes of
vulnerabilities using a wide array of supervisory tools.
Earlier, three separate units within the Reserve Bank
were regulating and supervising three different types
of entities in the banking sector, namely, the Scheduled
Commercial Banks, the UCBs and the NBFCs. Now, only
one department of regulation (DOR) regulates, while
another department of supervision (DOS) supervises
these three segments. This unified and harmonised
approach has led to regulatory efficiency and effective
oversight. It has enabled early and timely detection
of cross-linkages across the sectors as well as synergy
of regulatory and supervisory approaches. By no
means, however, we have adopted a one-size-fits-all
model. The rationale was to bring in an activity-based
supervisory approach in addition to entity-based
supervision.
(b) On-Site Supervision
The frequency and intensity of on-site supervisory
engagement is now based on the size as well as the
riskiness of the institutions. These supervisions
have also become more intense and frequent. We
have strengthened our engagement with the senior
management and boards of the supervised entities.
These are over and above the interactions held with
the supervised entities and their statutory auditors
18
Turnaround of the Indian Banking System
by the Senior Supervisory Managers (SSMs). The
focus is now more on identifying the root cause
of vulnerabilities, rather than dealing with the
symptoms alone. The priority areas are identified
for each supervisory cycle. The underlying objective
binding all these initiatives is to be proactive and ever
vigilant in identifying and addressing emerging risks
and vulnerabilities. The recent (November 16, 2023)
pre-emptive increase in the risk weights for consumer
credit and bank credit to NBFCs is an example of this
approach. We have also buttressed the feedback loop
between onsite examination and offsite analytics so
as to have continuous supervision.
(c) Offsite Supervision: Sharper Analytics
We have considerably strengthened supervisory
macro and micro data analytics to capture potential
and emerging risks. We deep dive into the business
models of banks and other lending entities and
closely monitor their asset liability mismatches and
funding stability. We have a system of early warning
signals that provide lead indications of risk build-
up. While asset quality and capital position indicate
resilience and robustness of financial institutions
in the medium term, recent experience in certain
advanced economies have shown that liquidity can
become an immediate cause of crisis. We monitor
liquidity position of banks and NBFCs very closely and
aberrations, if any, are immediately taken up with them
for remedial measures. Stress tests are also carried out
on a continuous basis for both individual entities as
well as at the systemic level. Thematic studies across
entities are also undertaken. We do not interfere in
the business decision making of regulated entities, but
our approach is to sensitise their senior management
for remedial action. In strengthening the offsite data
analytics, models have been developed with suitable
and judicious use of machine learning. The risk based
supervisory rating models have been revised on the
basis of feedback from external and internal experts.
Thus, our whole approach to supervision is to be pro-
RBI Bulletin January 2024
Turnaround of the Indian Banking System
active for minimising surprises, spotting concerns
and addressing them early.
(d) Sustained Focus on Capacity Building
As part of strengthening the Reserve Bank’s
supervision, a College of Supervisors (CoS) for
capacity building has been set up in 2020. The College
has joined the cohort of Global Institutions on
Financial Resilience. We have collaborated with many
international organisations such as the International
Monetary Fund, the World Bank, the Bank for
International Settlements, the Federal Reserve Board,
the Bank of England, the European Central Bank, the
Southeast Asian Central Banks and the Toronto Centre,
with the objective of having a platform for sharing
experiences and building global expertise. Through
this process, the effort is to expand the knowledge
pool of our supervisors.
(e) Enhanced Focus on IT and Cybersecurity Risks
Another area of our close attention is the
cybersecurity risk. Although there are obvious
benefits of adoption of IT in banking, the attendant
risks need to be effectively addressed. Considering the
diversification and complexity levels of our regulated
and supervised entities, we have issued differentiated
cybersecurity baseline control frameworks for the
varied entities. For instance, a graded approach for the
co-operative banks has been implemented, depending
upon the digital services they offer. Guidelines have
RBI Bulletin January 2024
SPEECH
also been issued for robust governance structures,
minimum security standards, IT and ITeS outsourcing,
business continuity management, roles and functions
of Chief Information Security Officers, among others.
Conclusion
In conclusion, I would like to say that the
remarkable turnaround in the Indian banking system
has been a cornerstone of India’s success story in the
recent years. Today, the Indian banking system is well-
placed to support India’s growth story in the years
ahead.
Trust is the essence of a robust financial system
and is built over a period of time through sustained
efforts. This needs to be preserved. The Reserve Bank
has committed itself to safeguard the trust factor of
the Indian financial system. Our recent efforts to
improve regulation and supervision are guided by
this basic principle. With our diverse responsibilities
such as monetary authority, regulator and supervisor
of banks and non-banks, payment systems, and other
segments of the financial markets, we have used
all our instruments – monetary policy combined
with macroprudential regulation and supervision –
synergistically to achieve better outcomes. As we move
forward, we guard against any sense of complacency,
and work tirelessly towards further strengthening
India’s banking and financial system.
Thank you. Namaskar!
19
Innovations in Banking - The Emerging Role for Technology and AI SPEECH

Innovations in Banking - The
Emerging Role for Technology
and AI*
M. Rajeshwar Rao
Distinguished participants, Good Morning.
At the outset, let me thank the organisers for
inviting me and giving this opportunity to share a
few thoughts on this very pertinent theme of finance,
banking and technology. In my address, I would largely
focus on RBI’s efforts to foster innovation in financial
ecosystem and how the emerging technologies such as
artificial intelligence are likely to reshape the financial
landscape.
The banks have played an extremely important
role in supporting the growth story of the Indian
economy. If we were to analyse the evolution of
Indian banking sector over the last 5 decades, we
can classify this evolution in three distinct phases
– post nationalisation, liberalisation, and the
third and current phase which we could term as
democratisation.
The level of financial intermediation at the time
of independence was quite low in India – ranging
below 10 per cent of the GDP. This was, more or less,
the case over the next two decades or so. With limited
financialisation and outreach of banking services,
the scope to mobilise deposits, facilitate credit flow,
and support the aspirations of a developing nation
was constrained. But this trend changed with the
nationalisation of banks which ensured wider banking
reach. This led to opening of bank branches across the
country resulting in greater mobilisation of deposits
and growth in credit, primarily for catering to the
credit needs of priority sectors.
The second distinctive phase in the evolution
of the banking sector was observed during post-
liberalisation phase (from 1991) till about 2003-04.
During this period, financial intermediation was
fundamentally transformed as globalisation and
integration opened up various growth opportunities
leading to increase in demand for credit. Also, in tune

Figure 1: Historical Overview of Indian Banking

* Remarks delivered virtually by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India - December 22, 2023 - at the 106th Annual Conference
of Indian Economic Association in Delhi.
Inputs provided by Chandan Kumar, Pradeep Kumar and Saurabh Pratap Singh are gratefully acknowledged.

RBI Bulletin January 2024 21

SPEECH
with the spirit of economic reforms, private entities
were allowed to enter banking sector, and they
supplemented the collective endeavour of banking
industry to support the growth story. Economic
growth aided by institutional and other attendant
reforms along with greater technological adoption in
the banking sector spurred a robust growth in both
deposit and credit during this period.
While the first two events (namely nationalisation
and liberalisation) are definitive in nature, i.e., we
can attribute definite time stamps for these events,
the third phase – democratisation of banking
services, which we are currently experiencing, is
continuing as a gradual but transformative process,
the pace of which has accelerated over the last few
years. This democratisation phase has coagulated
of late, underpinned by the trinity of financial
inclusion, increase in financial literacy, and focus on
consumer protection. This phase has also witnessed
massive expansion of banking outreach, especially
amongst the hitherto “excluded” sections through
innovative delivery models such as the use of banking
correspondents. This democratisation of financial
services got a major push through Pradhan Mantri Jan
Figure 2: Flows of Resources to Commercial Sector (` Lakh Cr)
22
Innovations in Banking - The Emerging Role for Technology and AI
Dhan Yojana and direct benefit transfer (DBT) scheme
along with proliferation of mobile and telecom
services. I would not be off the mark when I say
that that this phase has been a perfect combination
of demand-pull and supply-push models working
in tandem. Today, we are witnessing the unfolding
of true democratisation of financial services where
customers are greatly enabled to make informed
choices among the suit of available financial products
offered by banks and other financial service providers.
While we are discussing the role of banks in
India’s economic journey, let’s not lose sight of
the contribution and the increasing importance of
other financial intermediaries. Although bank credit
remains the dominant mode for meeting the growing
credit needs of commercial and household sectors,
the share of non-bank financial companies, micro-
finance institutions and of late, market instruments
has also been increasing. Non-banks, through their
innovative delivery and appraisal methods, have
further expanded the penetration of credit across the
geographical length and breadth of the country. They
have, along with banks, contributed immensely to
this journey of democratisation of financial services.
RBI Bulletin January 2024
Innovations in Banking - The Emerging Role for Technology and AI
India has made remarkable progress over the
years to become the fifth largest economy today. It
is also poised to become the third largest economy
over the next few years and have the aspiration of
becoming a developed nation by 2047. Reserve Bank
too has played a crucial role in unfolding of this
growth story. We are one of the very few central banks
around the world which has been entrusted with a
developmental mandate along with traditional central
banking functions.
For the next phase of development of our financial
architecture to support the aspirational growth of a
rapidly growing economy, the RBI is creating world
class financial infrastructure. Let me cite a few
examples. Today, India has one of the most advanced
state-of-the-art payments system that is affordable,
accessible, convenient, fast, safe and secure. Our
payment infrastructure caters to the needs of a diverse
group of consumers and offers a wide array of options
for executing all types of transactions. This has led to a
revolution in banking and financial services making the
banking truly ‘anytime, anywhere’. Everyone is aware
of the success of UPI and the convenience it offers. UPI
symbolises the ultimate democratisation of a financial
product which is available to everyone including to
customers who may not have smartphones as well
as for undertaking offline transactions. To put things
in perspective, during the FY 2022-23, UPI facilitated
about 83 billion transactions with approximate value
of `140 trillion. This is roughly 43 per cent of total
value of retail payment transactions1.
Another technological initiative where the RBI has
emerged as a leader is the Central Bank Digital Currency
(CBDC). We were one of the few major economies
to launch CBDCs when we launched pilot phases of
wholesale and retail CBDC in October and November
2022, respectively. Apart from its own initiatives,
1 https://www.npci.org.in/PDF/npci/statics/Retail-Payments-Statistics-
Nov23.pdf
RBI Bulletin January 2024
SPEECH
the RBI has facilitated technological innovations in
banking, non-banking, payment systems and financial
markets space. With its commitment to technology-
led innovations, the RBI has set-up the Reserve Bank
Innovation Hub (RBIH) to accelerate innovation across
the spectrum of financial services. In addition, the RBI
has also instituted a regulatory sandbox to provide a
platform for start-ups, fintech’s and other entities to
test and experiment with new products in a controlled
environment.
Discussions about emerging technologies offers
an opportunity to dwell a bit on how the financial
industry would need to interact with the newer
technologies and the breakthroughs in areas such as
artificial intelligence.
At different points of time, there have been
breakthroughs which have redefined the future
evolution of human societies such as the invention of
the wheel, the steam engine, development of vaccines,
the computer, and more recently internet and mobile
phones. The emergence of Artificial Intelligence or
AI as it is commonly known, is also being cited as
being in the same league and proponents of AI sound
convinced that it is going to transform the future. I
am no expert on technology and my focus is limited
to understanding its implications for the economy
and the financial sector. Therefore, let me share a few
thoughts on the adoption of AI by the banking and
financial services sector and risks and rewards that
this may entail.
As I understand, AI models can be placed in two
categories – the first set is the traditional AI models
while the second is categorised as generative AI
or GenAI. The differentiation between the two is
based on their capabilities and applications. Most of
the AI models currently available are in the form of
traditional AI and have been designed to perform a
particular task or set of tasks by responding to a set of
inputs or instructions. Traditional AI models can also
23
SPEECH Innovations in Banking - The Emerging Role for Technology and AI

learn and identify patterns from the available data Given its transformative nature and potential,
set and can make predictions based on the available if realised, generative AI could have a deep impact,
data. However, they can only respond within the pre- on productivity, jobs and income distribution. The
defined boundaries and follow specific pre-set rules. advocates of AI expect widespread benefits for
the economy and society, including increase in
The development of GenAI – a type of AI
income levels, automation of repetitive tasks and
technology that can produce various types of content,
obtaining better insights by combining different sets
including text, imagery, audio and synthetic data –
of information and data which may be otherwise
has garnered a very strong interest about its potential
difficult for human processing. There are others
economic impact. It is said that the GenAI possesses
who are more sceptical and point to several societal
general intelligence and cognitive abilities comparable
consequences, including increased unemployment.
to those of a human being. It is not confined to
They also point out that if the long-term benefits
a specific set of tasks but can adapt and learn in
are largely benign, the reallocation of resources and
various domains, demonstrating a level of autonomy,
labour in the transition could be challenging. We have
reasoning, and problem-solving capabilities.
also seen these concerns being expressed in India
Current estimates on AI’s boost to productivity with reference to IT sector, but the debate is ongoing
and economic growth are substantial but highly and is unlikely to be settled in near future.
uncertain. Academic research suggests that workers
Let me however flag a few concerns and also
in early AI-adopting firms experience higher labour
elucidate our expectations from the financial
productivity growth; most estimates imply around a
institutions deploying AI in their business processes
2–3 percentage point increase per year. One estimate
and decision making. While some of these concerns
by Goldman Sachs2 suggests that generative AI could,
are design specific risks such as biases and robustness
ceteris paribus, boost global GDP by about 7 percentage
issues, others are more traditional and user specific
points over a 10-year period.
such as data privacy, cybersecurity, consumer
In the financial sector, we are seeing several protection and preserving financial stability. These
banks and non-banks experimenting with AI. Global issues could be placed into three broad categories – data
experience, so far, however, suggests that such bias and robustness, governance and transparency.
deployment is mostly limited to back-office work
Data Bias and Robustness
and optimisation of business processes to deliver
efficiency gains. Some of the banks have also deployed AI is as good as a the data on which is has been
AI solution to manage compliance requirements which trained and thus inherits the issues, biases and errors
are routine in nature, for identification of patterns in in its training data. Human beings accumulate such
transactions or payment to detect money laundering training data over a lifetime of exposures, experiences,
attempts or for facilitating cross-border transactions evidences, and upbringing. That makes us capable of
and settlements. Some entities have also reported to coming to different conclusion based on the same
deploy AI solutions in customer facing processes such data set. Further, humans can collaborate, combine
as for making lending decisions or identification of and brainstorm to reach at an optimal solution. This is
target customer segments. not to say that humans are free of biases, but we have
embedded checks and balances in the institutional
2 decision making framework to check and prevent
h t t p s : / / w w w. g s p u b l i s h i n g . c o m / c o n t e n t / r e s e a r c h / e n /
reports/2023/10/30/2d567ebf-0e7d-4769-8f01-7c62e894a779.html them.

24 RBI Bulletin January 2024

Innovations in Banking - The Emerging Role for Technology and AI
Whereas traditional financial models are usually
rules-based with explicit fixed parameterisation, AI
models drastically change the process as they are able
to learn the rules and alter model parameterisation
iteratively. This aspect makes many AI models a
black box which are difficult to decode for audit and
supervisory review. Besides, there are several risks
and vulnerabilities such as arbitrary code execution3,
data poisoning4, data drift5, unexpected behaviour6,
and bias predictions7 which financial institution need
to be careful about while deploying AI models
Governance
AI may also pose some novel challenges for
governance, especially where the technology is used
to facilitate autonomous decision-making and may
limit or even potentially eliminate human judgement
and oversight. Some of the data and model issues
such as prompt injection8, hallucinations9 and toxic
output10 can also have implications for governance
frameworks, especially in financial institutions. This
may necessitate that regulators and the management
3 A vulnerability where an attacker can inject and execute unauthorised
code within an AI/ML model, potentially leading to malicious actions and
compromising system integrity.
4 The manipulation of training data with malicious intent to influence the
performance of an AI/ML model, causing it to make incorrect predictions
or exhibit biased behaviour.
5 The phenomenon where the statistical properties of the input data
for an AI/ML model change over time, potentially causing a decline in
performance as the model may become less accurate or reliable.
6 An undesirable and unpredictable response or output from an AI/ML
model, often occurring in situations outside its training data distribution
or due to unanticipated inputs.
7 The manifestation of unfair or discriminatory behaviour in an AI/ML
model’s predictions, influenced by biased training data or the algorithm
itself, leading to unequal treatment of different groups.
8 An attack involving the insertion of carefully crafted input prompts
to manipulate the output of a language model, leading to undesired or
potentially harmful responses.
9 An AI/ML model’s tendency to generate outputs that are not grounded
in reality or data it has been trained on, leading to the creation of false or
nonsensical information.
10 The generation of harmful, offensive, or inappropriate content by an
AI/ML model, often reflecting the biases present in its training data and
posing risks in applications such as natural language generation or image
synthesis.
RBI Bulletin January 2024
SPEECH
have a re-look at the frameworks for consumer
protection, cybersecurity and data privacy.
Some suggestions have been made to overcome
governance issues including the option of ‘putting a
human in the loop’ to help build trust in the AI driven
systems. Financial institutions would therefore need
to institute governance structures that oversee the
entire lifecycle of AI systems, specially the GenAI - from
data acquisition to model training and continuous
evaluation. Regular audits and assessments would
also be essential to verify the fairness, accountability,
and compliance of AI applications with extant laws
and regulatory standards.
Transparency
The AI models are inherently complex and opaque
requiring extra caution to ensure accountability. For
this reason, financial institutions may find it difficult
to explain an adverse or biased decision outcome
from an AI model to customer or supervisors.
The self-learning capability may make the model
discriminatory and induce behavioural biases after
some time. For example, an algorithm may predict
gender of potential target customer from shopping
history of a person or ethnicity from location data.
How do institutions overcome these challenges in a
transparent manner is the key to widespread adoption
and use of AI.
In this context, let me outline ten aspects, which
financial institutions looking to deploy AI based
models, may consider while designing AI solutions
in order to strike a balance between innovation and
responsible use of technology; to ensure fairness,
prevent biases, and safeguard consumer privacy.
These are:
i. Fairness: It should be ensured that the
algorithm does not discriminate against
anyone based on attributes which are
otherwise considered unethical or prohibited
by law. This can be achieved by conducting
25
SPEECH
regular fairness audits of the algorithms and
outcomes including external validation and
by employing techniques to identify and
rectify any unintended biases.
ii. Transparency: All stakeholders should be
aware about what are the inputs and how the
decisions are being arrived at. This should
be achieved by making the algorithmic
decision-making process understandable
and explainable to both regulators and
consumers.
iii. Accuracy: The entities deploying AI should
strive for accurate and appropriate training
data to minimise errors in decision making.
Identifying and understanding the types of
errors the AI models make and continuously
work to minimise false positives and
negatives is the key.
iv. Consistency: The entities should ensure
consistent application of the algorithm
across different situations to avoid biases or
unfair advantages and to ensure equitable
outcomes. Parameters entering the models
also need to be consistent and too frequent
changes to suit specific interests need to be
eschewed.
v. Data Privacy: In today’s digitised world,
adhering to data protection regulations
and ensuring that personal information is
handled securely and responsibly is of utmost
importance. Therefore, AI model should
be designed to adhere to data protection
protocols and regulations and entities should
ensure that personal information is always
handled securely and responsibly.
vi. Explainability: The entities shall be able to
provide clear explanations for the factors
influencing decisions or output to enhance
transparency and build trust in AI models.
26
Innovations in Banking - The Emerging Role for Technology and AI
Clear understanding of the inputs, processes
and output by the entities and establishing
channels for redressal of customer queries
or disputes will help in promoting trust.
vii. Accountability: Clear lines of accountability
for the outcomes of algorithmic decisions
shall be ensured by making it clear who is
responsible for the performance, robustness
and fairness of the model. Entities should
implement a comprehensive governance
framework that includes regular audits,
internal reviews, and external assessments to
hold individuals responsible for addressing
any issues related to the AI model.
viii. Robustness: The entities must undertake
rigorous validation and testing to ensure that
the algorithm performs well under different
conditions and is not overly sensitive to minor
changes in input data. Regularly updating
the model’s training data to include a broad
spectrum of conditions, ensuring adaptability
to changes in the economic landscape and
maintaining robust performance over time is
also critical.
ix. Monitoring and Updating: Regularly
monitoring the performance of AI engines
and updating them as may be required to
adapt to changing market conditions and
emerging risks may have to be ensured. Also,
monitoring the evolution of self-learning
algorithms is critical to ensure that they
continue to perform as envisaged originally.
x. Human Oversight: The entities should
include human oversight to address complex
or ambiguous cases and to ensure that ethical
considerations are taken into account. This
would also ensure that any unintended
consequences and governance issues are
detected in a timely manner and addressed.
RBI Bulletin January 2024
Innovations in Banking - The Emerging Role for Technology and AI
I think that incorporating these aspects would
help in developing the public trust if we truly want
to exploit the transformative potential of AI. Let me
also point out that in addition to institution specific
challenges, there are several geopolitical and systemic
issues which would also engage us going forward. For
example, like any other technological development
of the past, the access of technology is going to be
uneven among countries. Advanced economies (AEs)
may stand to benefit more than emerging market
economies (EMEs) due to the fact that EMEs’ have
higher share of employment in sectors such as
agriculture and construction which would inherently
have less opportunities for application of AI.
In addition to the above, there are only a handful
of entities globally which have the large amount of
data available to train GenAI models. This could give
rise to the questions of market power, competition
and cross jurisdictional issues.
RBI Bulletin January 2024
SPEECH
To conclude, let me say that as our banking sector
evolves, emerging technologies and AI will play a
significant role in the process. We need to ensure a
supportive regulatory framework to harness its benefits
while being mindful of any potential adverse impacts
and therefore robust governance arrangements and
clear accountability frameworks are important when
AI models are deployed in high-value decision-making
use cases. Development and deployment of AI models
need close human supervision commensurate with
the risks that could materialise from employing the
technology by the financial institutions. As the adoption
of AI is increasing, global efforts to develop regulatory
frameworks to help guide the use of AI applications,
are also increasing and greater cooperation in this
process would be required. Our collective endeavour
should be to embrace this evolution with mindfulness
and a sense of responsibility, while committing to a
future where technology serves as an enabler for the
society at large.
27
Safeguarding Financial Stability:
The Crucial Role of Assurance Functions
Safeguarding Financial
Stability: The Crucial Role of
Assurance Functions*
Swaminathan J.
Chief Compliance Officers, Chief Risk Officers, Heads
of Internal Audit, colleagues from the Reserve Bank of
India, Ladies, and Gentlemen. A happy New Year and
good afternoon to all of you.
I am delighted to address you today as we
gather for this inaugural conference of Heads of
Assurance functions. Last year, in our engagements
with the Boards of both Public and Private Sector
Banks, Governor had emphasised the importance of
independence of assurance functions as well as their
right to constructively challenge business functions
for establishing a strong compliance and risk culture.
Indeed, this conference today is a testament to the
significant importance the Reserve Bank attaches to
the assurance functions in the context of safeguarding
financial integrity and promoting regulatory
compliance.
Undoubtedly, these are good times for the
financial services industry, characterised by robust
parameters of performance and soundness. This
enviable position is owed, in no small measure, to
the hard work and unwavering dedication of the
compliance, risk management, and internal audit
functions. However, our success should not lull us
into complacency. Vigilance and a proactive alert
stance are essential to identifying and mitigating risks
that may emerge on the horizon.
As custodians of financial stability, we must be
acutely alert to the risks emanating from both familiar
* Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India
- January 10, 2024 - at the Conference for Heads of Assurance Functions in
Mumbai.
RBI Bulletin January 2024
SPEECH
and unforeseen sources. Risks may be inherent in
the business model such as over-concentration
to a particular sector or sources of funding. They
could also arise due to inadequate oversight
over operations, more so in vulnerable areas like
outsourcing. The growing use of technology and the
pervasive digitalisation of finance bring forth new
challenges, notably in the form of cyber-security
risks. Then there is also the ever-growing threat of
climate risks. In this milieu, assurance functions,
acting as the extended arms of supervision, are
crucial in identifying, escalating, and facilitating the
proactive management of risks and preventing them
from ballooning into a crisis.
Indeed, the assurance functions serve as the
indispensable foundation, ensuring not only the
stability of the individual financial institution but
also the resilience of the broader financial system.
Supervision, as I am about to explain, comes in much
later after the four lines of defence.
a. As you are aware, the first line of defence
operates at the business unit level itself
and involves proactive risk management
embedded within the daily operations of the
bank. Here, assurance functions play a crucial
role in fostering a culture of risk awareness
and compliance at every level.
b. The second line builds on this foundation
by establishing robust risk management
frameworks, policies, and procedures.
Compliance and Risk Management functions,
with their independence and expertise,
contribute significantly to shaping and
monitoring these frameworks.
c. The third line of defence centres around
internal audit, providing an objective and
systematic evaluation of the effectiveness
of risk management and internal
controls. Internal audit contributes
29
SPEECH
substantially to this line by ensuring an
independent and comprehensive coverage,
thorough examinations, and insightful
recommendations.
d. If we take external audit as the fourth line
of defence, Supervision, then, becomes the
fifth line of defence, complementing the
groundwork laid by the assurance functions.
Supervisory oversight, while essential, is
most effective when supported by a strong
foundation of risk-awareness, well-defined
risk management and compliance practices,
as well as robust internal and external
audits.
The seamless collaboration between these lines
of defence can form a formidable shield, safeguarding
not only individual banks but the entire financial
system against potential threats and vulnerabilities.
Therefore, the efficacy of assurance functions is not
just a matter of internal governance but a lynchpin for
the overall health of the financial ecosystem.
The Reserve Bank has always been cognizant of
the important role played by the internal assurance
functions. More than three decades ago the position
of ‘Compliance Officer’ was formalised in 1992
based on the recommendations of the ‘Committee
on Frauds and Malpractices in Banks’ (also know as
the Ghosh Committee). Apart from the compliance
function, several instructions have also been issued
on risk management and internal audit as well. A
key underlying principle repeatedly emphasised
in various RBI guidelines and instructions is
that assurance functions should have adequate
independence and stature within the organisation to
function effectively.
I would now like to highlight some specific aspects
in the domain of compliance, risk management and
internal audit, where I believe there can be greater
focus and attention.
30
Safeguarding Financial Stability:
The Crucial Role of Assurance Functions
Compliance
The Compliance function is at the forefront of
ensuring the integrity of banking operations. I would
urge you to adopt a ‘regulation-plus’ approach, where
the institution not only meets but exceeds regulatory
expectations. The compliance function must go
beyond mere adherence to regulatory requirements.
Compliance officers must endeavour to ensure that
products, processes, and outcomes fully comply not
only with the letter of the law or regulation, but also
the spirit and intent. This approach ensures not only
regulatory compliance but also the cultivation of a
culture that prioritises ethical conduct and sound
business practices.
We would also like Compliance Officers to give
due attention to the Risk Assessment Report (RAR)
observations and Risk Mitigation Plans (RMP). To
ensure sustained compliance, it is important to address
the root cause of the observations. Further, there
should be no compromise on the agreed timelines for
RMP, and the bank should ensure that all RMP and
RAR observations are comprehensively addressed well
before the start of the next inspection cycle. Pending
compliance paragraphs is not a desirable situation and
may be a reflection of the lack of due attention by the
management as well as the Board. Such instances can
also invite stern supervisory action.
As you would be aware, the RBI in 2022 introduced
the DAKSH platform, which is a web-based end-to-end
workflow application with anytime-anywhere secure
access that inter-alia facilitates focussed compliance
monitoring. Apart from using DAKSH, I would
encourage Compliance teams to explore IT solutions
for monitoring of internal compliance as well.
Risk Management
Risk management should ensure that the strategic
business and capital plans are properly aligned with
the risk appetite of the bank. The Internal Capital
Adequacy Assessment Process or ICAAP under Pillar 2
RBI Bulletin January 2024
Safeguarding Financial Stability:
The Crucial Role of Assurance Functions
is crucial in this regard. Pillar 2 acknowledges that the
minimum regulatory requirements stipulated under
Pillar 1 may not capture the full spectrum of risks that
a bank faces. Therefore, the ICAAP provides a forward-
looking mechanism for banks to comprehensively
assess and manage their internal capital needs, by
considering a broad range of risks. Banks should
learn to recognise its inherent value and use ICAAP
document as a strategic tool to align capital plans with
risk appetite and risk assessment.
The other aspect I would like to highlight is
the meticulous monitoring of risk limits. Frequent
breaches in risk limits, coupled with their non-
ratification or their routine ratification, poses
substantial dangers to the stability and integrity
of financial institutions that extend beyond the
immediate financial implications. If breaches become
normalised or overlooked, employees may perceive risk
limits as mere guidelines rather than non-negotiable
boundaries, thereby compromising the institution’s
overall risk awareness. Therefore, it is imperative to
address breaches systematically, conduct thorough
investigations, and implement corrective measures to
fortify the risk management practices.
Internal Audit
As regards Internal Audit, very often we come
across deficiencies in the scoping, coverage, and
periodicity as well as issues in independence of the
internal audit function. Proper scoping, periodicity,
and independence in risk-based internal audit are
essential components of a robust governance and risk
management framework.
The scoping process should be aligned with the
organisation’s risk profile. It involves identifying
and prioritising key risk areas that warrant thorough
examination. The internal audit should not just rely
on the audit reports of a branch/ division but have
a program for centralised off-site analytics to timely
identify any unusual trend or outliers, examine their
RBI Bulletin January 2024
SPEECH
materiality and have these rectified by instituting
system level controls. I would encourage internal
audit to increasingly leverage technology, including
usage of Artificial Intelligence and Machine Learning
to facilitate early identification of key risk areas.
The periodicity of internal audit should be
responsive to the dynamic nature of the risk
environment. High-risk areas may necessitate more
frequent audits, while lower-risk areas may be subject
to less frequent but regular assessments. In addition
to regular audits, a continuous monitoring framework
should be in place to detect and respond to risks in
real-time.
Independence of Assurance Functions
Before I conclude, I would like to delve upon the
importance of independence of assurance functions.
These functions serve as a critical check and balance
within the governance structure of an organisation.
Therefore, independence of assurance functions is
fundamental for ensuring that assurance activities are
conducted with integrity, objectivity, and effectiveness.
As Heads of Assurance functions, you play a critical
role in upholding the integrity and effectiveness of
your respective functions within your organisations.
You must be vigilant in protecting the independence
of these roles, resisting compromises that may arise
due to dual hatting or other conflicting roles. While
business owners may be known risk takers in pursuit
of their business goals, I would urge upon the heads
of assurance functions to be the conscience keepers
and not allow themselves to be influenced by some
short-term priorities.
Very often some friends in the industry
confide that only managing a business function
improves career prospects as compared to managing
assurance functions which are considered typically
non glamorous. I can assure you from my personal
experience that this is not the case. Promotions are
based on a combination of individual performance,
31
SPEECH
skills, and organisational needs. Executives who
demonstrate excellence, leadership, and a commitment
to contributing to the organisation’s success are bound
to advance in their careers, regardless of whether they
are in assurance functions or other areas in the bank.
Conclusion
In conclusion, this inaugural conference of Heads
of Assurance functions underscores the significant role
these functions play in upholding financial stability.
As we navigate good times in the financial services
industry, let us not become complacent. Instead,
we must remain alert by proactively identifying and
mitigating emerging risks. Most importantly, the
32
Safeguarding Financial Stability:
The Crucial Role of Assurance Functions
commitment to independence and effectiveness in
our assurance functions is not just a matter of internal
governance but a cornerstone for the overall health of
the financial ecosystem.
With this, I would once again like to extend my
warm wishes to each one of you for a very Happy New
Year. May the coming year bring success, prosperity,
and fulfilment in both your professional and personal
endeavours. As we embark on new challenges and
opportunities, may our collective efforts contribute to
the continued growth and resilience of the financial
sector.
Thank you.
RBI Bulletin January 2024
Resolution of Stressed Assets and IBC – the Future Road Map
Resolution of Stressed Assets and
IBC – the Future Road Map*
Swaminathan J.
Director, CAFRAL, Shri B P Kanungo; Shri N S
Vishwanathan former Deputy Governor RBI, Smt.
Indrani Banerjee, Additional Director CAFRAL, Shri
Diwakar Gupta, Senior Advisor, CAFRAL, distinguished
guests from the financial fraternity; and ladies and
gentlemen.
I am delighted to be present here at this very
topical Conference on Resolution of Stressed Assets
and Insolvency and Bankruptcy Code – the Future
Road Map. The IBC notified in May 2016 introduced a
comprehensive legislation that introduced a paradigm
shift in the landscape of insolvency and bankruptcy
proceedings in India, bringing in a more structured,
institutionalised and time-sensitive approach to
resolving financial distress.
The IBC has been in operation for almost eight
years now. Although this time frame is not very
significant in the life cycle of a legislation, the IBC has
been an evolving law with several amendments since
its enactment. Last year, the Ministry of Corporate
Affairs released a public consultation paper proposing
several amendments including mandatory admission
of applications where default is established, increasing
reliance on records submitted by Information Utilities,
streamlining the resolution process, etc. These as well
as some other proposals on the IBC have been a subject
matter of discussion among professionals, bankers,
legal fraternity, regulators and other stakeholders.
So, it is an opportune time to review the working of
the IBC and discuss its future course. I am happy to
* Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India
- January 10, 2024 - at the Conference on Resolution of Stressed Assets,
and IBC organised by CAFRAL in Mumbai.
RBI Bulletin January 2024
SPEECH
note that CAFRAL has assembled an illustrious list
of speakers covering eminent jurists, policy makers,
bankers and resolution professionals who will enrich
this seminar with their varied perspectives.
Let me start this series of sessions and discussion
by sharing some of my own perspectives on this
landmark legislation and the road ahead.
Paradigm change brought in by the IBC
Before the implementation of the IBC, there
existed a fragmented legal framework which resulted
in protracted and inefficient insolvency proceedings.
Various laws and regulations, each dealing with
distinct aspects of insolvency and bankruptcy, co-
existed, creating complexities, overlaps, and occasional
contradictions. In the absence of a comprehensive law,
the RBI too had attempted to fill the void with a series
of schemes such as Corporate Debt Restructuring
(CDR) Scheme, Strategic Debt Restructuring (SDR),
Scheme for Sustainable Structuring of Stressed Assets
(S4A), etc. These schemes, sometimes fondly referred
to as an ‘Alphabet Soup’ in some sections of the
media, attempted to emulate the desirable features of
an insolvency legislation.
The IBC was enacted to fill the legal void felt by
the absence of a comprehensive insolvency law. Its
salient features included a unified and time-bound
resolution process, establishment of resolution
focussed adjudicating authorities such as the National
Company Law Tribunal (NCLT) and the National
Company Law Appellate Tribunal (NCLAT), as well as
the establishment of the Insolvency and Bankruptcy
Board of India (IBBI) to ensure effective regulation of
insolvency proceedings and professionals. The IBC also
facilitates corporate insolvency resolution through
the formation of a Committee of Creditors (CoC) and
a structured liquidation process if resolution is not
achieved within the specified time, thus contributing
to a more streamlined and transparent system.
33
SPEECH
In my view, the IBC meets the five principal
criteria1 of an efficient resolution regime, namely:
i. Firstly, the resolution regime should prioritise
going concern status over liquidation.
Resolution on a going concern basis is
generally more valuable than liquidation of
the entity.
ii. Secondly, it should force the creditors to
come together and work out a resolution plan
that tries to preserve the value by looking at
the options to keep the company as a going
concern.
iii. Thirdly, the resolution regime should ensure
a time bound resolution so that value
deterioration for the creditors of an insolvent
exposure is arrested.
iv. Fourthly, it must provide claw back of
questionable transactions that may have
contributed to the financial stress of the
defaulting borrower.
v. Finally, an effective resolution regime
should protect the majority creditors from
the minority by forcing a ‘cramdown’ if
the majority creditors decision covers a
predefined threshold of approval.
Positive outcomes
The outcomes of the Code have also played out
reasonably well so far. This has brought in substantial
efficiency in the resolution process and improvement
in recovery rates for financial creditors.
From a banker’s and supervisor’s perspective,
amongst the various improvements brought in by
the IBC, the fundamental shift from a ‘debtor in
1
Resolution of Stressed Assets and IBC, Speech delivered by
Shri M Rajeshwar Rao, Deputy Governor, RBI on April 30, 2022 at the
International Research Conference on Insolvency and Bankruptcy held at
IIM Ahmedabad.
34
Resolution of Stressed Assets and IBC – the Future Road Map
possession’ to a ‘creditor in control’ model is perhaps
one of the most impactful. There is growing evidence
to suggest that debtors are avoiding defaults due to a
credible threat of loss of control of their businesses.
I believe this improved credit discipline has inter-alia
also contributed to the marked decline in the non-
performing assets of banks witnessed in the last few
years.
Challenges and Criticism
IBC, while significantly transforming the
insolvency landscape, has encountered challenges
and criticisms. Timely resolution, a crucial goal
of the IBC, faces obstacles may be due to certain
operational inefficiencies, leading to delays in the
resolution process. Concerns have been raised about
the infrastructure, staffing, and overall capacity of the
NCLT and the NCLAT, impacting the effectiveness of
the resolution mechanism. Evolving provisions for
cross-border insolvency also contribute to the areas
where the IBC has faced difficulties.
It is also observed that there are certain
discussions playing out about the recovery percentage
through IBC process. The point to be noted is that the
IBC is a resolution framework rather than a recovery
framework and any commentary based solely on
recovery percentages may overlook the broader
objectives and achievements of this transformative
legislation. While recovery may be an essential
component, the true strength of the IBC lies in its
objective to resolve corporate financial stress, preserve
enterprise value, protect the interests of various
stakeholders, and thereby contribute to the overall
economic stability. Therefore, a nuanced evaluation
that considers the transformative impact on corporate
behaviour, the efficiency of the resolution process,
and the preservation of business value is essential for
a comprehensive understanding of the IBC’s success
and effectiveness.
RBI Bulletin January 2024
Resolution of Stressed Assets and IBC – the Future Road Map
The Way Forward
India is aspiring to become a developed country
by 2047. But, for that to happen, we need to fully
utilise all the available resources in the country, be it
the demographic advantage, or the physical resources.
One of the important enablers of faster economic
growth is the ease of doing business.
An orderly resolution framework is closely
related to the ease of doing business, influencing the
business environment in several ways. Businesses
operate in a dynamic environment where there may
be success or failure. An orderly resolution process
allows for smoother exit. It reduces capital erosion
and facilitates efficient recycling of capital. Further,
an orderly resolution mechanism instils confidence in
investors by providing a transparent and predictable
process for handling financial distress.
Businesses rely on credit for their operations
and expansion. Orderly resolution and credit cost are
interlinked elements within the financial ecosystem.
The Expected Loss is a key factor that determines
this credit cost. Expected Loss in turn is driven by
the ‘probability of default’ and more pertinently to
today’s context on resolution, the ‘loss given default’
or LGD. Therefore, there is a need to make resolution
process efficient to minimise the LGD. Further, when
lenders have the confidence that they can recover
their money more reliably and in a timely manner,
they are more inclined to lend which boosts the flow
of credit in the economy, thereby supporting business
and economic growth.
From a banker’s perspective, it starts at the
underwriting stage itself. Bankers base their decision
on the viability of the borrower. However, there is a
need to also factor in the possibility of a stress leading
to resolution and potential challenges the lenders
may face in realisation of assets, at the underwriting
stage itself.
RBI Bulletin January 2024
SPEECH
At the resolution stage, as major creditors, banks
also participate in the Committee of Creditors or CoCs
which is entrusted with critical decisions regarding
the resolution process. The CoC representation
requires a diverse skill set spanning financial acumen,
legal understanding and industry knowledge. Further,
given the time bound nature of the process, the
CoCs need to act with a sense of purpose making
a pragmatic assessment of available options and
deciding swiftly. Therefore, banks need to ensure
that their nominees are empowered with adequate
authority and experience. Their active involvement
in sharing of information, evaluating and approving
resolution plans as well as collaboration with
resolution professionals and other stakeholders is
imperative in ensuring timely resolution.
The success of IBC also hinges on the expertise
and proficiency of skilled resolution professionals.
They need to be equipped with a thorough knowledge
of the law as well as have a sound understanding of
the nuances of finance apart from strong negotiation
and management skills. I believe the Insolvency
and Bankruptcy Board of India is already conducting
various programmes to impart the specialised skills
and knowledge required for resolution professionals.
The Indian Banks Association and CAFRAL can also
assist and collaborate with IBBI in such initiatives for
effective capacity enhancement.
From the Government and Judiciary’s side, there
is a pressing need to invest in building the capacity
of adjudicating authorities, such as the NCLT and the
NCLAT, to handle an increasing caseload efficiently.
Adequate staffing, training, and infrastructure of
these institutions will go a long way in expediting
resolution. In fact, last year the Government took
measures to fill up vacancies and it is understood
that proposals to increase the strength of adjudicating
authorities is also under consideration. Efforts could
also be made to reduce delays at the admission
35
SPEECH
stage itself as well as rationalising the processes. For
instance, I understand that one of the proposals in
this regard is the streamlining of data submission to
the Information Utilities (IUs) and allowing admission
based on data available with IUs. Innovative
technology-based solutions are also being explored to
facilitate faster disposal of cases.
The introduction of new laws often brings
about a period of adjustment and interpretation as
stakeholders, legal professionals, and the judiciary
grapple with the intricacies of the legislation. In the
context of the IBC, this phenomenon is heightened
due to the significant stakes involved. Parties involved
in insolvency proceedings do file appeals and review
petitions challenging lower court decisions. While
there is no objection to any party seeking legitimate
legal recourse, these proceedings have often been
used as delaying tactics by defaulting borrowers
and has significantly contributed to delays in the
resolution timeline. One hopes that as the law
matures, judicial interpretation and precedents would
emerge to help navigate the nuances, ultimately
reducing delays in future. It is conceivable that certain
judicial interpretations may prompt the need for
further reforms, aiming to enhance the efficiency and
improve the outcomes of the resolution regime.
From a reform agenda perspective, there are also
some aspects of IBC that merit further legislative
consideration. For instance, there is a need to look
at resolution of conglomerates and addressing
resolution of corporate groups. Very often such
groups have intricate corporate structure with inter-
connected related party relationship that add to
the complexity and become a hurdle in individual
entity resolution. Similarly, there is the unfinished
36
Resolution of Stressed Assets and IBC – the Future Road Map
agenda of a comprehensive resolution framework for
financial service providers such as banks, non-banking
financial companies and insurance companies. In
the absence of an IBC like legislative framework for
resolution of financial institutions, the IBC has been
used for resolution of NBFCs. I would imagine that
this conference will get to debate these and several
other measures that can be thought about to bring in
a more efficient IBC process in the days to come.
Conclusion
To conclude, the IBC is a landmark legislation
which completely transformed the insolvency and
resolution framework in the country. There is a
visible improvement in the credit culture as evident
from the marked decline in NPAs and increased
resolutions even before the admission stage. Further,
significant foundational work has been done by the
Government and it is expected that the next set of
reforms once legislated by the Parliament would
further strengthen the IBC. However, there is always
scope for improvement, especially with regard to the
timeliness of the resolution process.
With these closing remarks, I once again thank
CAFRAL for this opportunity to share my thoughts
here today. I am sure the deliberations and insights
shared by esteemed participants will contribute to the
wealth of knowledge in the field of insolvency and
bankruptcy, fostering innovative solutions and paving
the way for a more robust and efficient financial
landscape. I sincerely hope that the outcomes of this
conference will not only benefit the participants but
will also have a far-reaching impact on the broader
economic ecosystem. Wishing the organisers,
speakers, and participants a truly enlightening and
successful event ahead. Thank you.
RBI Bulletin January 2024
Building resilient brand India amidst global uncertainty
Building resilient brand India
amidst global uncertainty*
Swaminathan J.
Chairman, State Bank of India Shri Dinesh Khara,
distinguished guests and my fellow colleagues from
the banking fraternity, ladies, and gentlemen.
A very warm good morning to all of you. I am
delighted to be here at the 10th edition of the SBI
Banking & Economics Conclave, surrounded by
industry leaders from banking and financial sectors,
leading economists, policy makers, and other
stakeholders. This marquee event provides a platform
for discussing pertinent issues, sharing insights, and
exploring potential solutions for the industry. In a
lighter vein, after being a part of its host institution
in its past nine editions, I now have the honour of
being invited to speak at this prestigious event! I
am extremely grateful to Chairman Shri Khara for
extending this invitation.
As mentioned by Governor, RBI, Shri Shaktikanta
Das in the recent post Monetary Policy Press
Conference, the years 2020 to 2023 will perhaps go
down in history as a period of ‘Great Volatility’1.
The global economy today is witnessing a renewed
phase of turbulence with fresh headwinds from the
banking sector turmoil in some advanced economies.
A few bank failures and its contagion risk have
brought financial stability and resilience issues to
the fore again. Therefore, the theme of this year’s
conclave ‘Building resilient brand India amidst global
uncertainty’ is highly topical in the current economic
scenario.
* Speech by Shri Swaminathan J, Deputy Governor, Reserve Bank of India
- December 28, 2023 - at the 10th SBI Banking and Economic Conclave in
Mumbai.
1
MPC Press Conference - Governor’s Opening Remarks; December 08,
2023
RBI Bulletin January 2024
SPEECH
The term ‘brand India’, refers to the overall
image, perception, and reputation of India as a nation.
It encompasses a wide range of elements, including
the country’s culture, heritage, economy, innovation,
tourism, and more. Today, I would like to focus on
brand India and its resilience from a financial sector
perspective.
Building a resilient brand India from a banking and
economy perspective includes the aspects of financial
stability, risk management and crisis preparedness,
sound corporate governance as well as adaptive
regulation complemented by robust supervision,
financial inclusion and customer protection.
Today, as compared to the situation five years
ago, the Indian banking sector stands tall, reflecting
its strength and viability. As of September 2023, the
Capital to Risk Weighted Assets Ratio of Scheduled
Commercial Banks stood impressively at 16.8 per
cent, underscoring the sector’s resilience. The Gross
Non-Performing Assets (GNPA) at 3.2 per cent were
at a decadal low with Net NPAs at 0.8 per cent. The
uptrend in profitability has continued into its fourth
consecutive year with Return on Assets at a healthy
1.2 per cent and Return on Equity at 12.9 per cent. As
compared to 2018 when 12 banks were placed under
the Prompt Corrective Action (PCA) framework, today
no SCB is under PCA.
As we note the current state of our financial system,
it is also imperative to reaffirm our commitment to
maintaining and building upon this robust position.
Our journey towards resilience should not end with
achieving impressive metrics; it requires a continuous
dedication to sound financial practices, prudent risk
management, transparency and ethics. We need to
remain steadfast in our commitment to upholding the
elevated standards we have achieved, ensuring that
our financial institutions remain resilient in the face
of any future challenges.
37
SPEECH
A vibrant and resilient financial sector is a sine qua
non for a country’s growth and development. As our
economy strives to grow in an evolving and uncertain
macro-economic environment, it is imperative that
the financial system in general continues to remain
resilient through the uncertainties to fuel economic
growth. In our financial ecosystem, the strength
of individual banks is the bedrock upon which the
edifice of financial resilience stands.
I believe a resilient future ready bank needs to be:
i. financially resilient through adequate
capital, liquidity and earnings;
ii. operationally resilient so as to deliver
critical services to customers even in times
of disruptions and
iii. organisationally resilient to anticipate risks
early and absorb them efficiently.
In this context, I would like to discuss six aspects
that, in my opinion, banks may need to delve deeper
into in the upcoming period.
1. Interest Rate Risk
Effective management of interest rate risk is a
crucial aspect of prudent banking. Recent regulatory
changes, notably, the symmetrical treatment of fair
value gains and losses as well as removing restriction
on HTM have given banks greater flexibility in
managing this risk in their investment portfolios.
However, considering the dynamic nature of the
interest rate risk, banks must proactively manage and
mitigate this risk.
Increasing NIMs that banks are presently enjoying
may not be sustained in the future when the interest
rate cycle reverses, whenever that happens in future.
External benchmark linked loans will be repriced
much faster than deposits contracted during the peak
of the interest rate cycle resulting in pressure on NIMs
and eventually profitability. Therefore, apart from
interest rate risk in the trading book, banks must be
38
Building resilient brand India amidst global uncertainty
mindful of the interest rate risk in the banking book
as well.
On the liabilities side, banks must endeavour to
proactively manage the pricing and duration of their
deposits while trying to diversify the sources and
optimising the product mix of deposits. Excessive
reliance on bulk deposits should be avoided as these
are more sensitive to interest rate movements and
perpetuate concentration risk while also eroding
earnings.
2. Business models
As recent global events have demonstrated,
sometimes, even business models once perceived as
safe can fail. Therefore, banks need to remain alert
to the risks inherent in their business models and
mitigate them in a timely manner. In good times like
this, financial institutions must review their growth
plans while putting in place adequate risk management
systems to handle the emerging risks. It is imperative
for Boards of banks and NBFCs to fix suitable sectoral
and sub sectoral exposure limits and monitor them
closely to avoid any sectoral concentration, adverse
selection or dilution of underwriting standards.
The growing collaboration between banks, NBFCs,
and FinTechs is driving innovation in products,
services, and business models. An important
consideration is the cautious adoption of model-based
lending through analytics. Banks and NBFCs should
exercise caution in relying solely on preset algorithms,
ensuring that these models are robust, regularly
tested, and recalibrated as needed to maintain robust
underwriting standards.
3. Operational Resilience
In view of the ever-increasing adoption and
usage of digital channels by members of public, it has
become imperative for banks and payment system
participants to ensure uninterrupted availability of
various online and mobile banking channels at all
times.
RBI Bulletin January 2024
Building resilient brand India amidst global uncertainty
Recently, there have been a few incidents of
unscheduled downtimes inconveniencing several
customers. It is also observed that many banks have
not been spending fully, the budget earmarked for
procurement of IT systems and IT security systems.
Banks have to proactively commit adequate resources
for augmenting their IT infrastructure, commensurate
with their business plans and also monitor them for
their continued availability and stability.
Banks and other ecosystem participants must have
robust Disaster Recovery and Business Continuity
Plans in place and test them periodically. Further,
IT infrastructure and channels have to be protected
from the emerging cyber threats to ensure operational
resilience. I would therefore like to reiterate that the
Boards and IT Strategy Committees of the banks need
to step up their oversight in this matter.
4. Outsourcing Risks – Managing third party
dependencies
While we acknowledge the numerous advantages
that outsourcing can offer to a bank, such as cost savings
and increased efficiencies, it is crucial for banks to
maintain vigilance regarding the accompanying risks.
These risks include the potential loss of control over
critical operations, the risk of data security breaches,
heightened dependency on third-party providers, and
the possibility of reputation damage stemming from
the misconduct of service providers.
As the RBI has time and again reiterated,
outsourcing does not absolve a bank of any of its
obligations and they continue to remain ultimately
responsible for the activities of their service
providers including recovery agents. Banks must
ensure that their service providers employ the same
high standard of care in performing the services as
would be employed by the banks. Banks should not
engage in any outsourcing that may result in their
internal control, business conduct or reputation being
compromised or weakened.
RBI Bulletin January 2024
SPEECH
5. Climate Risk
It also needs to be appreciated that we are living
in an era when climate change and its consequent
risks cannot be ignored. Due to its geographic,
environmental and economic characteristics India is
particularly vulnerable to climate change. Variability
in monsoon patterns coupled with temperature
change impact crop production and affect our food
security. Apart from agriculture, even in other sectors
the economic impact of climate change in India could
be substantial.
Climate-related financial risks pose both micro
and macro-prudential concerns. Climate change risk is
ascending the hierarchy of threats to financial stability
across advanced and emerging economies alike and
consequently, the need for an appropriate framework
to identify, assess and manage climate-related risk has
become imperative.
6. Customer protection
Lastly, and perhaps most importantly, I would like
to discuss the aspect of customer protection which is
integral to building a resilient brand India in many
ways.
Financial services institutions exist because
of their customers. They entrust regulated entities
with their hard-earned money, their dreams, and
their aspirations. Therefore, customer protection
and timely grievance redressal, forms the foundation
of trust and reliability, contributing to the overall
resilience and reputation of the brand.
I would therefore urge banks to have a proactive
approach towards resolving customer grievance issues
by identifying and addressing the root cause of these
issues. Customer complaints should only be rejected
after careful examination by the Internal Ombudsman.
To do this effectively, regulated entities must ensure
that the Internal Ombudsman is adequately resourced.
39
SPEECH
Last year the RBI had issued guidelines on digital
lending to address concerns relating to delivery of
credit products and their servicing through the digital
route. These guidelines inter-alia endeavoured to
promote transparency by requiring a standardised
Key Fact Statement which should contain details of
the Annual Percentage Rate, the recovery mechanism,
the grievance redressal officer designated specifically
to deal with digital lending/ FinTech related matters
and the look-up period. Any fees or charges, including
penal charges, which are not mentioned in the Key Fact
Statement cannot be charged by the Regulated Entity to
the borrower at any stage during the tenor of the loan.
However, we are still coming across instances of non-
compliance with these guidelines, requiring us to take
appropriate supervisory action including imposition
of business restrictions, where warranted. I would
therefore urge the industry to review and strengthen
its compliance with all regulatory instructions on
customer protection and grievance redress.
Role of Regulation and Supervision
Before I conclude, I would also like to reflect
on the role of regulation and supervision, which
are essential components of a resilient and stable
financial environment.
The regulatory framework lays down prudential
standards and guidelines which are designed to mitigate
various risks including credit, market, operational and
liquidity risks. The RBI is endeavouring to make its
regulations more principle based, activity oriented
rather than entity oriented and proportionate to the
scale of systemic risk. The recent initiatives on scale-
based regulation for NBFCs, tiered approach for UCBs
and harmonisation of regulations across regulated
entities are examples of this regulatory stance.
40
Building resilient brand India amidst global uncertainty
Further, counter-cyclical macro-prudential measures
are also used to address systemic issues such as the
recent revision in risk weights for certain segments of
consumer credit and bank credit to NBFCs.
On the supervisory side, the initiatives taken
are aimed at identifying risks and vulnerabilities
early, putting in place a structured early supervisory
intervention framework to mitigate the risks,
increasing the focus on root cause of vulnerabilities,
and harmonising the supervisory rigour across
various segments of financial system. An endeavour
has been made to build a pro-active off-site
surveillance mechanism to identify emerging risks
and assess the vulnerabilities across the supervised
entities for timely action to mitigate or manage these
vulnerabilities. The aim is to make supervision more
forward-looking, proactive and preventive which will
promote resilience and financial stability.
Conclusion
In essence, building resilience in the banking and
economy sector for brand India is about establishing
a foundation of strength, stability, and adaptability.
It requires a holistic and collaborative effort from the
financial institutions, regulatory bodies, government,
and other stakeholders so that India can not only
weather global uncertainties but also emerge as a
dynamic and resilient player in the international
economic landscape.
With this I thank you for inviting me and allowing
me to share my perspectives in this forum. I am sure
that the deliberations during this Conclave will be very
productive and result in significant value addition to
the participants. My compliments to the organisers
for such a well-coordinated event. Thank you!
RBI Bulletin January 2024
ARTICLES

State of the Economy

Are Food Prices the ‘True’ Core of India’s Inflation?
Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns
Stock-Bond Correlation and the Macroeconomy:
Evidence from India
Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey
Climate Stress Testing and Scenario Analysis:
Navigating Uncharted Waters
State of the Economy
State of the Economy*
The world economy faces divergent near-term growth
prospects. Emerging market economies led by Asia are poised
to outperform the rest of the world. The Indian economy
recorded stronger than expected growth in 2023-24, un-
derpinned by a shift from consumption to investment. The
government’s thrust on capex is starting to crowd-in private
investment. Headline inflation recorded a marginal uptick
in December, driven by higher food inflation due to unfa-
vourable base effects.
Introduction
2024 marks a leap in time, adjusting for all
those seconds that accumulated over the preceding
three years due to the revolution of the earth
around the sun. With 2023 ending on a high note
despite formidable odds, there are several things
to cheer about in 2024. First, projections are being
consistently proved pessimistic by incoming data.
Projections of global growth that are currently
converging well below 3 per cent for 2024 may once
again be belied on the upside. Second, the global
economy has displayed an extraordinary resilience,
enduring wars, tight financial conditions and havoc-
wreaking climate change. Economies across the world
are adapting better than expected and this provides
a strong bedrock for the year ahead. Third, with food
and energy prices on the ebb – crude prices fell in
spite of production cuts, although they are jittery
on tensions in the Red Sea through which 12 per
cent of seaborne oil trade and 8 per cent of liquified
natural gas trade flows - the genie of inflation is
* This article has been prepared by Michael Debabrata Patra,
G. V. Nadhanael, Shahbaaz Khan, Biswajeet Mohanty, Kunal Priyadarshi,
Harshita Keshan, Ramesh Kumar Gupta, Pankaj Kumar, Harendra Behera,
Rigzen Yangdol, Amit Kumar, Love Kumar Shandilya, Rashika Arora,
Harshita Yadav, Rachit Solanki, Pratibha Kedia, Shubhi Chauhan,
Sai Dheeraj Vayugundla Chenchu, Satyam Kumar, Yuvraj Kashyap,
Suvendu Sarkar, Manish Tripathi, Bhimappa Arjun Talwar, Khushi Sinha,
Ashish Santosh Khobragade, Asish Thomas George, Vineet Kumar
Srivastava, Samir Ranjan Behera, and Deba Prasad Rath. Views expressed
in this article are those of the authors and do not represent the views of
the Reserve Bank of India.
RBI Bulletin January 2024
ARTICLE
being bottled. Central banks are pausing in their
unrelenting tightening cycle, signalling to euphoric
markets that interest rates have peaked and 2024
may well see cuts sooner than later. Central banks are
being anointed once again as saviours of the world.
Investors also hope that the winding down of their
balance sheets through quantitative tightening may
slow down. Economies that are sagging today may
look forward to milder outcomes in 2024 as the widely
predicted recession has failed to occur. Generative
artificial intelligence is the flavour of the times.
Global trade growth, which had flatlined in
2023, is expected to recover in 2024, although it
will likely remain below its pre-pandemic trend.
According to the World Bank, the expected upturn in
trade volume will reflect a recovery in the demand
for goods.1 International tourism has been showing
signs of a robust recovery, particularly in Asia, and is
expected to reach pre-pandemic levels by 2024. There
is an emerging trend of realignment in international
trade relations, with countries seeking to secure
supply chains closer to home or from more resilient
sources. According to the World Trade Organization,
trade measures introduced by G20 economies have
become more restrictive in recent months than trade-
facilitating, although the value of traded merchandise
covered by facilitating measures continued to exceed
that covered by restrictions.2 Be that as it may, a
structural shift in international trade is underway
and supply chains are at its heart. Increasingly,
trading nations are focusing on security, be it food,
water, energy, cyber, financial or operational security.
Consequently, they’re reconfiguring supply chains to
avoid concentrating sourcing or production in one
part of the world. Increasing resilience is the clear
and resounding call. Even as economies diversify,
1 Global Economic Prospects, World Bank, January 2024.
2 30th Joint Summary on G20 Trade and Investment Measures (OECD/
WTO/UNCTAD).
41
ARTICLE
new trade corridors are emerging as also more trade
agreements with market access provisions.
In the financial markets, the prospects of lower
borrowing costs and slower central bank selling
of treasuries in order to avoid liquidity stresses is
acting like a tail wind for bond markets, bringing
yields off their 2023 highs. The US dollar is trading
below critical resistance levels, and this has lifted the
downward pressures weighing down other currencies
through 2023. Markets remain on edge, however, and
turn volatile whenever data releases point to abiding
strength of economic activity that may push away rate
cuts further into 2024 or even beyond. The growing
optimism is propelling stock markets to new records,
funnelling money into corporate debt, even lower-
quality paper, and spreads are getting compressed.
While the developing world faces divergent near-
term growth prospects, emerging market economies
(EMEs) led by Asia are poised to outperform the rest
of the world as the US dollar weakens and the outlook
for global interest rates turns benign. Many of them
are rushing to issue debt, taking advantage of the new
risk-on appetite suffusing investors, and the fact that
the average emerging market yield has fallen by about
150 basis points.3 Issuances have so far been restricted
to investment-grade sovereigns. Global EM debt funds
have once again started to attract inflows. On the
flip side, still high borrowing costs and accumulated
currency depreciations keep debt sustainability risks
high in many of them. This is of concern at a time
when they need additional external financing to
stimulate investment and growth, address climate
change related risks and accelerate progress towards
sustainable development goals. Countries accounting
for more than half of the market capitalisation of the
Morgan Stanley Capital International (MSCI) emerging
market index will see general elections in 2024.
3
https://www.bloomberg.com/news/articles/2024-01-07/bond-sales-hit-
record-pace-as-emerging-markets-see-year-of-risks
42
State of the Economy
Investors wait to exhale as political winds sweep over
the fortunes of EMEs.
The world’s hottest year since 1901 is behind us,
but the heavy rainfall, disastrous floods and raging
wildfires it spawned may well continue in 2024,
according to the European Union’s Copernicus Climate
Change Service. It is believed that the 1.5 degrees
Celsius threshold will be breached again this year.
Tighter supplies of food staples are expected amidst
El Nino conditions that are forecast to continue in the
first half of 2024, putting at risk production of rice,
wheat, palm oil and other farm products in some of
the world’s top agricultural exporters and importers.
It is in this context that the 2024 UN Climate Change
Conference (UNFCCC COP 29) that will convene
in Baku, Azerbaijan, in November 2024 assumes
importance. It will include the 29th session of the
Conference of the Parties (COP 29), the 19th meeting
of the COP serving as the Meeting of the Parties to the
Kyoto Protocol (CMP 19), and the sixth meeting of the
COP serving as the Meeting of the Parties to the Paris
Agreement (CMA 6). It is expected to complete the
first enhanced transparency framework and the new
collective quantified goal on finance. In fact, it is not
until COP 29 that countries are due to agree to replace
the USD 100 billion per year goal for climate finance
from developed countries to developing countries. In
view of the growing gap estimated at almost US $7.5
trillion up to 2030 between the needs of developing
countries facing increasing climate impacts and the
help provided for them to achieve their climate goals,
setting the stage for finance will become the key issue
for 2024.
On the National Statistical Office’s (NSO’s) first
advance estimates of India’s national income for
2023-24 which are discussed more fully in Section III,
it has been presciently pointed out that the upside
surprise in the NSO’s estimate is underpinned by
a shift from consumption to investment, with the
government’s thrust on capex starting to crowd-in
RBI Bulletin January 2024
State of the Economy
private investment4 as high corporate profitability
quarter after quarter has begun to induce the creation
of fixed assets. The housing market is seeing its
highest sales in more than a decade and real estate
is exhibiting remarkable resilience and adaptability.
Anecdotal evidence points to home renters becoming
owners of bigger homes – a development that is
widely expected to become a trend. The rate of real
fixed investment is at a historic high in 2023-24; this
augurs well for enhancing the productive capacity of
the economy and hence its potential. With the current
account deficit remaining modest, domestic saving
is financing growth in India in a world buffeted by
daunting headwinds.
On the flip side, private consumption, which
accounts for 57 per cent of GDP, languished in
the backwash of the slow but steady revival of the
rural economy. This only serves to underscore
our consistently held view that inflation has to be
restrained to its target for growth to be inclusive and
sustained. In fact, in the fast moving consumer goods
space, companies are reporting a faster growth of
volumes than of value despite lower than expected
festival spending and a higher pass-through of lower
raw material costs by producers to consumers.
Spillovers to gross value added by trade are also
showing up in the NSO’s first advance estimates.
The inflation outcome for December 2023
needs to be carefully parsed to gauge the underlying
dynamics. First, the increase in headline inflation by
14 basis points over the November reading was due to
legacy effects of inflation’s history - an unfavourable
base effect of 45 basis points stemming from a
commensurate month-on-month decline in December
last year that gets automatically incorporated into
year-on-year calculation in which India’s inflation is
typically expressed. The way around these historical
4 N R Bhanumurthy, Business Standard, January 6, 2024 https://www.
business-standard.com/opinion/columns/gdp-growth-data-suggests-a-
robust-recovery-124010600008_1.html
RBI Bulletin January 2024
ARTICLE
base effects is to calculate inflation as the seasonally
adjusted month-on-month annualised rate. Second,
December is a time when winter’s bounty causes a
seasonal decline in vegetable prices. This year’s dip
turned out to be underwhelming, however, because
of the delayed correction in onion and tomato prices.
Hence seasonal adjustment may not be a panacea if
underlying inflation dynamics have to be understood.
Not adjusting for seasonality but taking out base
effects, the month-on-month annualised CPI inflation
rate for December shows a decline of 3.8 per cent from
a similarly calculated inflation rate of 6.7 per cent in
November.
The slowdown in exports has emerged as a drag on
growth, but the outlook is lighting up at new frontiers.
India is rapidly emerging as a global leader in hosting
global capability centres (GCCs). The primary catalyst
is the preference global corporations have towards
owning their resources and locating them in India
which boasts quality real estate, competitive rental
rates, an extraordinary talent pool, and a consistently
growing economy. The result is worldwide delivery
of a range of solutions around back-office support
and IT functions, location assessment, recruitment
and human resources support. The share of GCCs in
the total office real estate transactions rose to 35 per
cent in 2023. It is estimated that by 2025, India will
have 1900 GCCs with a market size of US $ 60 billion.5
Another comparative advantage for India is the
surging data centre capacity, which is poised to exceed
one gigawatt by 2024 and position the country as a
global data centre hub. This development has positive
implications for foreign direct investment which has
started turning around in the second half of 2023-24
and is flowing increasingly into business services.
Turning to the financial sector, the RBI’s latest
assessment of the performance of the banking sector,
5 https://economictimes.indiatimes.com/tech/information-tech/non-us-
multinationals-set-to-join-gcc-gold-rush-in-india/articleshow/106553721.
cms?from=mdr
43
ARTICLE
including co-operative banks, and non-banking
financial institutions6 points to a steady expansion
in the consolidated balance sheet of the scheduled
commercial banks (SCBs), driven by credit to retail and
services sectors. Higher net interest income and lower
provisioning boosted net interest margins (NIMs) and
profitability. The capital to risk weighted assets ratio
(CRAR) of SCBs was 16.8 per cent at end-September
2023, with all bank groups meeting the regulatory
minimum requirement and the common equity tier 1
(CET1) ratio requirement comfortably. There has been
a steady improvement in asset quality, with the gross
non-performing assets (GNPA) ratio at 3.2 per cent at
end-September 2023. The consolidated balance sheet
of non-banking financial companies (NBFCs) also
expanded, led by double digit credit growth while
profitability and asset quality improved and CRARs
remained higher than the regulatory requirement.
Looking ahead, the report flagged the increasing
interconnectedness between banks and NBFCs, with
the latter needing to broad base their funding sources
and reduce overdependence on bank funding. Banks
and non-banks need to bring in greater empathy in
their customer services, while making concerted
efforts to protect them and the payments system from
the risks of fraud and data breaches emanating from
cyber threats. Both banks and NBFCs need to further
strengthen their balance sheets through robust
governance and risk management practices to meet
the growing aspirations of the Indian economy.
The RBI’s semi-annual Financial Stability Report
(FSR) of December 20237 also assessed the domestic
financial system to be resilient, supported by strong
macroeconomic fundamentals, healthy balance
sheets of financial institutions, moderating inflation,
improving external sector position and continuing
6 RBI, Report on Trend and Progress in Banking, 2022-23.
7 The FSR reflects the collective assessment of the Sub-Committee of the
Financial Stability and Development Council (FSDC) on risks to financial
stability and the resilience of the Indian financial system.
44
State of the Economy
fiscal consolidation. Macro stress tests for credit
risk reveal that SCBs would be able to comply with
minimum capital requirements, with the system-
level CRAR in September 2024 projected at 14.8 per
cent, 13.5 per cent and 12.2 per cent, respectively,
under baseline, medium and severe stress scenarios.
The consolidated solvency ratio of the insurance
sector remains above the minimum threshold limit
of 150 per cent. Domestic regulatory initiatives,
conditioned by the fast-changing macro-financial
environment, have been aimed at improving the
robustness and resilience of the financial system.
Regulatory measures focussed on stemming systemic
risk, reducing regulatory arbitrage, expanding secure
digitalisation, improving efficiency of markets,
ensuring customer protection and expanding access
to finance. Regulators remain vigilant to the rapidly
changing economic environment in order to ensure
the efficiency and soundness of the financial system.
Set against this backdrop, the remainder of the
article is structured into four sections. Section II
covers the rapidly evolving developments in the global
economy. An assessment of domestic macroeconomic
conditions is set out in Section III. Section IV
encapsulates financial conditions in India, while the
last Section sets out concluding remarks.
II. Global Setting
Global economic activity turned out to be
stronger than expected in 2023. It is projected
to slow down in 2024 with considerable cross-
country heterogeneity. In its latest Global Economic
Prospects (GEP), the World Bank has projected
global growth to ebb from an estimated 3.0 per cent
in 2023 to 2.9 per cent in 2024, marking the third
consecutive year of deceleration. The weaker outlook
reflects the combined effects of the dampening of
demand due to tight monetary policy, restrictive
credit conditions, softening labor markets,
reduced savings buffers, the waning of the revenge
spending on services and lacklustre global trade and
investment (Table II.1). Growth in AEs is expected
RBI Bulletin January 2024
State of the Economy ARTICLE

Table II.1: GDP Growth Projections – Chart II.1: Global GDP Growth Nowcast (Q-o-Q)
Select AEs and EMEs
(Per cent)

2023 2024
Projection for Month
of Projection June January June January
2023 2024 2023 2024

World* 2.7 3.0 2.9 2.9

Advanced Economies (AEs)

US 1.1 2.5 0.8 1.6

Euro area 0.4 0.4 1.3 0.7

Japan 0.8 1.8 0.7 0.9

EMEs

Brazil 1.2 3.1 1.4 1.5 Sources: CEIC; OECD; and RBI staff estimates.

Russia -0.2 2.6 1.2 1.3

remained below its historical average in December
India# 6.3 6.3 6.4 6.4
(Chart II.3b).
China 5.6 5.2 4.6 4.5 Festival spending in December lifted consumer
sentiments in the US, the UK and the euro area.
South Africa 0.3 0.7 1.5 1.3
Financial conditions also eased marginally in the
Note: *: PPP weighted. #: India’s data is on a fiscal year basis. US and the euro area during the month, reflecting
Source: World Bank.
expectations of central banks embarking on policy

to bottom out at 1.2 per cent in 2024 from 1.5 per

Chart II.2: Geo-political Risks Indicator
cent in 2023 while emerging market and developing
economies (EMDEs) are expected grow by 3.9 per cent
in 2024.
Our model based nowcast points to global
growth momentum losing steam in Q4:2023
(Chart II.1).
Geopolitical risks remain elevated, posing both
upside risks to commodity prices and downside risks
to growth (Chart II.2). Freight charges have suddenly
come under renewed pressure due to hostilities
around the Red Sea8 (Chart II.3a). Nonetheless,
the global supply chain pressures index (GSCPI)

Source: BlackRock Investment Institute, December 2023.

8 IMF Portwatch (https://portwatch.imf.org/).

RBI Bulletin January 2024 45

ARTICLE State of the Economy

Chart II.3: Trends in Freight Rates and Supply Chain Pressures

a. Drewry World Container Index (WCI) b. Global Supply Chain Pressure Index (GSCPI)

Note: The WCI indicates the actual spot container freight rates for major
east west trade routes. The composite represents a weighted average of the Note: GSCPI reflects data on transportation costs and manufacturing
8 shipping routes by volume and is reported in USD per 40-foot container. indicators.
Source: Bloomberg. Source: Federal Reserve Bank of New York.

rate cuts sooner than previously
(Chart II.4).
The global composite purchasing managers index
(PMI) increased to 51.0 in December 2023 - its highest
reading since July 2023 - from 50.5 in November,
supported by improved inflows of new work and a surge
in business confidence. The services PMI remained
anticipated in expansion, buoyed by a sequential improvement.
Global manufacturing activity remained tepid, with
the PMI declining further to 49.0 in December,
recording a contraction for the sixteenth consecutive
month (Chart II.5). New business intakes declined
across consumer, intermediate and investment goods
industries.

Chart II.4: Sentiments and Financial Conditions

a. Consumer Sentiment b. Financial Conditions

Notes: 1. Japan: A score above 50 indicates consumer optimism, below 50 shows lack of consumer confidence and 50 indicates neutrality.
2. Eurozone and UK: -100 indicate extreme lack of confidence, 0 neutrality and 100 extreme confidence.
3. India and US: Higher the value higher is the consumer confidence.
Source: Bloomberg.

46 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart II.5: Global PMI

Note: A level of 50 corresponds to no change in activity and a reading above 50 denotes expansion and vice versa.
Source: S&P Global.

Global trade in goods and services grew at a tardy
pace of 0.2 per cent in 2023 – the slowest expansion
outside global recessions in the past 50 years.
Significant headwinds continue to prevail – PMIs for
new export orders remained in the contractionary
zone in December as export orders for both services
and manufacturing recorded sequential declines
(Chart II.6). The World Bank has, however, projected
global trade to pick up to 2.3 per cent in 2024.
In December, global commodity prices eased,
primarily driven by energy prices. The Bloomberg
Commodity Price Index fell by 3.1 per cent (m-o-m)
[Chart II.7a]. Crude oil prices declined in the first
half of December due to record production in the US,

Chart II.6: Global PMI: New Export Orders

Note: A level of 50 corresponds to no change in activity and a reading above 50 denotes expansion and vice versa.
Source: S&P Global.

RBI Bulletin January 2024 47

ARTICLE
although disruptions in the Red Sea vessel traffic,
alluded to in the introductory section, imposed
uncertainty and upward pressure on prices in the
second half. Nonetheless, crude oil prices ended the
month with a m-o-m decline of 6 per cent (Chart II.7b).
The Food and Agriculture Organization’s (FAO’s)
food price index recorded a decline of 1.5 per cent in
December, driven down by falling sugar, vegetable oils
and meat prices, more than offsetting the increases in
prices of dairy products and cereals (Chart II.7c). Gold
prices edged up further in December for the fourth
consecutive month in sync with rising safe haven
demand on a weaker US dollar and lower treasury
yields (Chart II.7d).
Globally, headline consumer price inflation
declined substantially through 2023 but it continues
to remain above target in most inflation-targeting AEs
Chart II.7: Global Commodity and Food Prices
a. Bloomberg Commodity Index
c. Food Prices
Sources: Bloomberg; World Bank Pink Sheet; and FAO.
48
State of the Economy
and about half of inflation-targeting EMEs. According
to the World Bank, global headline inflation is
expected to moderate further over 2024-25, with core
inflation slowing and commodity prices declining,
but it is expected to remain above its pre-pandemic
average beyond 2024.
December saw a marginal uptick in inflation
in major economies such as the US and Euro area.
Bucking the declining trajectory over the previous two
months, CPI inflation in the US rose to 3.4 per cent in
December from 3.1 per cent in November. As per the
Fed’s preferred measure - the personal consumption
expenditure (PCE) - headline inflation was 2.6 per
cent (y-o-y) in November 2023, the lowest since
February 2021. Euro area inflation also rose to 2.9 per
cent in December (flash estimates) from 2.4 per cent
in November with phasing out of energy subsidies
b. Brent
d. Gold
RBI Bulletin January 2024
State of the Economy
Chart II.8: Inflation - AEs and EMEs
a. AEs
c. Services
Sources: Bloomberg; and OECD.
(Chart II.8a). In the UK, CPI inflation moderated to
3.9 per cent in November from 4.6 percent in October
while Japan’s inflation (CPI excluding fresh food)
moderated to 2.5 per cent in November 2023, its
lowest reading since July 2022. Among the emerging
market economies (EMEs), inflation moderated in
Russia and Brazil in November while China recorded
a deflation of 0.3 per cent in December (Chart II.8b).
Despite the recent moderation in core inflation in
AEs, it continues to remain above headline inflation
(Chart II.8c and II.8d).
Global equity markets ended 2023 on an ebullient
note and the MSCI world index surged 4.7 per cent
(m-o-m) in December, reflecting gains in both AEs
and EMEs as investors bet on systemic central
banks embarking on rapid interest rate cuts in 2024
RBI Bulletin January 2024
ARTICLE
b. EMEs
d. Core
(Chart II.9a). Sovereign bond yields moderated across
the globe, with the US 10-year G-sec yield declining by
45 bps in December to below 4 per cent (Chart II.9b).
In the currency markets, the dollar index depreciated
by 2 per cent (m-o-m) in December. The MSCI currency
index for EMEs went up by 1.5 per cent in December
as capital inflows, mostly into the equity segment,
remained robust (Chart II.9c and II.9d).
As inflation pressures wane, several central banks
are signalling a pivot towards policy rate cuts in 2024
although the timing and magnitude of rate cuts are
subject to considerable uncertainty. In December,
most AE central banks kept their policy rates steady,
while Israel cut its benchmark rates by 25 bps in
January 2024 (Chart II.10a). Among EMEs, Chile and
49
ARTICLE State of the Economy

Chart II.9: Global Financial Markets

a. Equity Indices (MSCI) b. US Government Bond Yields

c. Currency Indices d. Portfolio Flows to EMEs

Sources: Bloomberg; and IIF.

Hungary reduced their policy rates by 75 bps each December 2023. Peru continued to cut rates by 25 bps
while Columbia lowered its key rate by 25 bps in in its January 2024 meeting (Chart II.10b).

Chart II.10: Changes in Policy Rates

a. AEs b. EMEs

Source: Bloomberg.

50 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart III.1: Economic Activity and GDP Growth Nowcast

a. Index of Supply Chain Pressures for India b. Economic Activity Index c. GDP - Actual and Nowcast

Note: The economic activity index (EAI) is constructed by extracting the common trend underlying twenty-seven high-frequency indicators of economic activity using a
Dynamic Factor Model. The EAI is scaled to 100 in February 2020 and 0 in April 2020, the worst affected month due to mobility restrictions.
Sources: National Statistical Office (NSO); and RBI staff estimates.

III. Domestic Developments Aggregate Demand

In India, economic activity remained resilient on
the back of robust domestic demand, notwithstanding
the external headwinds. Supply chain pressures
in India ebbed in December and remained below
historical average levels (Chart III.1a). Our economic
activity index (EAI) nowcasts GDP growth for Q3:2023-
24 at 7 per cent (Chart III.1b and III.1c).
The first advance estimates (FAE) of national
income released by the NSO on January 5, 2024
placed the real gross domestic product (GDP) growth
for 2023-24 at 7.3 per cent, up from 7.2 per cent
in the preceding year (Chart III.2). Among the
components of real GDP, growth in private final
consumption expenditure (PFCE) moderated

Chart III.2: Weighted Contribution to GDP Growth

Source: NSO.

RBI Bulletin January 2024 51

ARTICLE State of the Economy

Chart III.3: E-way Bills and Toll Collections

a. E-way Bills b. Toll Collections

Sources: GSTN; and RBI.

to 4.4 per cent from 7.5 per cent a year ago, primarily bills posted a growth of 13.2 per cent in December
due to the drag from rural demand owing to lower 2023 (Chart III.3a). Toll collection reached a series
kharif production. Urban demand, on the other hand, high, expanding by 18.6 per cent (y-o-y) in December
remained robust on the back of higher disposable [Chart III.3b].
income, led by robust growth in salaries and wages.
Automobile sales albeit moderating sequentially,
Government final consumption expenditure (GFCE)
registered an expansion of 14.1 per cent (y-o-y) in
growth at 4.1 per cent recorded an uptick over the
December, while two and three-wheeler sales
previous year. Gross fixed capital formation (GFCF)
recorded double digit y-o-y growth (Chart III.4a
remained strong, with growth of 10.3 per cent in 2023-
and III.4b). Tractor sales recorded a two-year low
24. The government’s sustained thrust on capital
in December, and contracted by 19.8 per cent
expenditure along with ebullience in residential
(y-o-y). Vehicle registrations recorded strong y-o-y
housing underpinned the strength of investment.
growth in December following hefty discounts on
Hence, the ratio of real GFCF to GDP increased to 34.9
high inventory models, although the momentum
per cent in 2023-24. India’s export growth, tapered to
eased post the festival season (Chart III.4c). The
1.4 per cent in 2023-24 (April-November), primarily
consumption of petroleum products grew by 2.6 per
on account of sluggish merchandise exports, while
cent y-o-y in December (Chart III.4d).
services exports registered steady growth. As the
growth in imports far outpaced the growth in exports, The latest survey conducted by the Retailers
external demand dragged down overall growth of the Association of India9 shows that the retail sales
economy.
9 https://rai.net.in/business-survey.php. The 45th round of the survey

Evidence from high frequency indicators point was conducted during October-November 2023, as a onetime survey to
cover the festival period, and the growth rates for the period October-
towards the sustained strength in demand conditions November 2022 has been computed as the average of the yearly growth
in Q3: 2023-24 and the first half of January 2024. E-way rates of October 2022 and November 2022.

52 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart III.4: Automobile Sector Indicators

a. Automobile Sales b. Rural Demand

Source: SIAM. Sources: SIAM; and TMA.

c. Vehicle Registrations d. Petroleum Consumption

Source: Ministry of Road Transport and Highways. Source: Petroleum Planning and Analysis Cell.

recorded a growth of 7.0 per cent during the corresponding period last year (Chart III.5). Annual
festival months of October-November 2023 over the sales growth moderated across all categories, except

Chart III.5: Retail Sales growth

Sources: Retailers Association of India; and RBI staff estimates.

RBI Bulletin January 2024 53

ARTICLE State of the Economy

Chart III.6: Labour Market Conditions

a. Unemployment Rates b. Employment Situation: All India

Source: CMIE.

personal care. Some sectors such as jewellery, sport
goods and footwear recorded double digit growth.
As per the data available from the Centre for
Monitoring of Indian Economy (CMIE), the all-India
unemployment rate (UR) declined to 8.7 per cent in
December, driven by lower UR in rural areas even
as urban UR recorded an increase (Chart III.6a). The
labour force participation rate (LFPR) and employment
rate (ER) increased in both urban and rural areas (Chart
III.6b).
The employment outlook in the organised
sector, as polled by the PMIs for manufacturing and
services, remained in the expansionary zone (Chart
III.7). For services, it recorded a sequential pick-up in
December whereas it recorded a m-o-m moderation
for manufacturing.

Chart III.7: PMI Employment Indices

Note: A PMI value of above 50 indicates expansion.

Source: S&P Global.

54 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart III.8: Demand for Work under MGNREGS

Source: Ministry of Rural Development, GoI.

Households’ work demand under the Mahatma
Gandhi National Rural Employment Guarantee
Scheme (MGNREGS) rose sequentially by 12.9
per cent in December as rabi sowing neared its
completion. Recourse to MGNREGS employment
remained lower in December 2023 from a year ago,
reflecting improved rural employment prospects
(Chart III.8).
India’s merchandise exports at US$ 38.5
billion registered a growth of 1.0 per cent (y-o-y) in
December 2023, a notably high momentum of 13.5
per cent being largely offset by an unfavourable base
effect (Chart III.9). Out of 30 major commodities,
17 commodities accounting for 53.9 per cent of the
export basket registered expansion on a y-o-y basis.
Engineering goods, iron ore, gems and jewellery,

Chart III.9: India’s Merchandise Exports

a. Exports b: Decomposition of Sequential Change in Export Growth (y-o-y)

Sources: PIB; and DGCI&S. Sources: PIB; DGCI&S; and RBI staff estimates.

RBI Bulletin January 2024 55

ARTICLE State of the Economy

Chart III.10: India’s Merchandise Exports – Relative Contribution

(December 2023 over December 2022)

Note: RMG: Readymade Garment.

Sources: PIB; and RBI staff estimates.

electronic goods and drugs and pharmaceuticals
supported overall export growth whereas petroleum
products, readymade garments of all textiles, rice,
other cereals, and marine products were the major
laggards (Chart III.10).
Merchandise imports at US$ 58.3 billion
recorded a y-o-y decline of 4.8 per cent in December,
a negative base effect more than offsetting the
positive momentum (Chart III.11). Among the 30
major commodities, 15 commodities accounting for
55.0 per cent of the import basket contracted.
Petroleum, oil and lubricants (POL), transport
equipment, vegetable oil, fertilisers and chemicals
were the main drags while electronic goods, gold,

Chart III.11: India’s Merchandise Imports

a. Imports b. Decomposition of Sequential Change in Import Growth (y-o-y)

Sources: PIB; DGCI&S; and RBI staff estimates.

56 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart III.12: India’s Merchandise Imports – Relative Contribution

(December 2023 over December 2022)

Sources: PIB; and RBI staff estimates.

artificial resin, coal and professional instruments South African Cape of Good Hope. This is raising
contributed positively to overall import growth transit times, freight costs and war-risk premiums.
(Chart III.12). Reflecting these developments, the daily transit
trade volume transiting through the Bab el-Mandeb
The merchandise trade deficit narrowed to a
Strait and the Suez Canal has fallen considerably
5-month low of US$ 19.8 billion in December 2023
(Chart III.15). According to the IMF, the impact of this
as the sequential increase in exports outstripped
disruption was most felt in petroleum, chemical and
imports. With a fall in petroleum exports and a
negligible increase in POL imports sequentially, the
share of POL in the total merchandise trade balance
Chart III.13: Decomposition of India’s
rose to 40.7 per cent in December 2023 from 36.3 per Merchandise Trade Deficit
cent in November (Chart III.13).
During April-December 2023, India’s merchandise
exports at US$ 317.1 billion contracted by 5.7 per cent
(y-o-y). Merchandise imports at US$ 505.1 billion
also declined by 7.9 per cent (y-o-y). Consequently,
the merchandise trade deficit narrowed to US$
188.0 billion from US$ 212.3 billion during the
corresponding period a year ago. Petroleum products
were the major source of the trade deficit, followed by
electronic goods (Chart III.14).
Global supply chains have been under pressure
due to the recent attacks on commercial ships in the
Sources: PIB; and DGCI&S.
Red Sea trade route, necessitating rerouting via the

RBI Bulletin January 2024 57

ARTICLE
Chart III.14: Commodity wise Merchandise
Trade Deficit
Note: Coal, coke and briquettes exports in December 2023 are assumed to be at
the same level as in November 2023.
Sources: PIB; DGCI&S; and RBI staff estimates.
non-metallic mineral products; mining and quarrying;
and agriculture sectors. These developments impart
considerable uncertainty to the near-term outlook for
India’s merchandise trade.
In the context of recent increases in freight
costs, it is worth noting that the ratios of transport
costs to India’s goods imports and exports stood
Chart III.16: Freight to Trade Ratio
a. Goods Import
Source: RBI.
58
State of the Economy
Chart III.15: Disruptions in the Red Sea – Daily
Transit Trade Volumes
Note: Data are 7-day moving averages.
Source: IMF PortWatch.
at 2.8 and 4.8 per cent, respectively, in Q2:2023-
24, declining from highs recorded a year ago
(Chart III.16).
In November 2023, services exports increased by
4.3 per cent on a y-o-y basis to US$ 28.1 billion, led
by growth in software services, business services and
travel services. On the other hand, services imports
b. Goods Export
RBI Bulletin January 2024
State of the Economy ARTICLE

During April-November 2023-24, the gross fiscal

Chart III.17: Services Exports and Imports
Source: RBI.
declined by 11.1 per cent y-o-y to US$ 13.7 billion,
mainly due to a fall in transportation and business
services (Chart III.17). As a result, net services earnings
improved by 24.8 per cent (y-o-y) to US$ 14.4 billion in
November 2023.
deficit (GFD) of the central government stood at 50.7
per cent of the budget estimates (BE), lower than 58.9
per cent of BE during the corresponding period of the
previous year on the back of muted revenue spending
and buoyant direct tax revenues. On the expenditure
side, capital spending recorded an increase by 31.0
per cent (y-o-y) while revenue expenditure growth
was contained at 3.6 per cent (Chart III.18a). Capital
outlay (i.e., capital expenditure excluding loans and
advances) recorded an increase of 28.6 per cent,
resulting in a marked improvement in the quality of
spending of the Central government (Chart III.18b).
On the receipts side, direct tax collections grew
by of 24.6 per cent (y-o-y) during April-November
2023, with income tax and corporate tax collections
rising by 29.4 per cent and 20.1 per cent, respectively,
reflecting increased compliance, higher advance tax
collections and widening of the tax base10,11,12. Indirect
tax collections grew by 5.0 per cent (y-o-y), with GST
and customs revenues recording a growth of 10.3 per

Chart III.18: Government Expenditure (April-November)

a. Expenditure Growth b. Quality of Expenditure

Source: Controller General of Accounts (CGA).

10 Press Information Bureau (PIB), January 1, 2024.

11 PIB, December 18, 2023.
12 PIB, October 26, 2023.

RBI Bulletin January 2024 59

ARTICLE State of the Economy

Chart III.19: Tax Revenue (April-November 2023) Chart III.20: Non-tax Revenue (April-November)

Sources: CGA; and Union budget documents. Source: CGA.

cent and 0.3 per cent, respectively, although excise collections, limiting its impact on the budgeted fiscal
duties registered a contraction of 7.9 per cent. Overall, deficit.
gross tax revenue recorded a growth of 14.7 per cent
GST collections (Centre plus States) grew by 10.3
over a year ago (Chart III.19).
per cent (y-o-y) to `1.65 lakh crore in December 2023.
Non-tax revenue collection recorded a y-o-y The gross GST collection during April-December 2023-
growth of 43.4 per cent during April-November 2023, 24 (`15.0 lakh crore) was 11.7 percent higher than
on the back of higher than budgeted surplus transfer `13.4 lakh crore during the corresponding period of
from the Reserve Bank13 while non-debt capital 2022-23 (Chart III.21).
receipts contracted by 38.6 per cent14 (Chart III.20).
Total receipts of the Central government recorded a Chart III.21: Monthly GST Revenue
y-o-y expansion of 19.2 per cent.
The Union government presented the first batch of
supplementary demand for grants in December 2023
for the financial year 2023-24 involving an additional
cash outgo of `58,378 crore (of which revenue
expenditure is `53,858 crore and capital expenditure
is `4,519 crore). However, this additional cash outgo
is expected to be compensated by higher revenue

13 During 2023-24, the Reserve Bank transferred a surplus of `87,416.22

crore to the central government which is higher than both the amount
transferred last year (`30,307.45 crore) and the budgeted amount under
Dividend/Surplus transfer of Reserve Bank of India, Nationalised Banks
and Financial Institutions in the Union Budget 2023-24 (`48,000 crore).
14 During April-November 2023-24, the government mobilised `8,859

crore in the form of disinvestment receipts as compared with `28,429 Source: PIB.
crore during the corresponding period of the previous year.

60 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart III.22: States’ Fiscal Indicators (April - November)

a. Fiscal Indicators b. Growth in Receipts and Expenditure

Note: Data pertains to 22 states.

Source: CAG.

As of November 2023, states’15 gross fiscal deficit
reached 50.5 per cent of the BE (Chart III.22a). The
revenue deficit widened due to slower growth in
revenue receipts relative to revenue expenditures
(Chart III.22b). Tax and non-tax revenues also
recorded lower growth on a high base. Grants from
the Centre contracted following the cessation of GST
compensation to States and the tapering of finance
commission grants (Chart III.23a).
The thrust on capital spending continued with a
42.8 per cent growth in capital expenditure, aided by
the Union government’s Scheme for Special Assistance

Chart III.23: States’ Revenues and Expenditures (April - November)

a. Revenue Receipts b. Quality of Expenditure and Capital Outlay

Note: Data pertains to 22 states.

Source: CAG.

15 Data pertains to 22 states.

RBI Bulletin January 2024 61

ARTICLE
to States for Capital Investment. By November 2023,
the Union government had sanctioned `97,374 crore
(74.9 per cent of the `1.3 lakh crore allocated for 2023-
24), of which `59,030 crore has already been disbursed
to the states (Chart III.23b).
Aggregate Supply
The NSO’s FAE placed the growth of gross value
added (GVA) at basic prices at 6.9 per cent for 2023-24,
lower than 7.0 per cent in the preceding year (Chart
III.24). Growth in agriculture, forestry and fishing
moderated to 1.8 per cent in 2023-24 from 4.0 per
cent a year ago. The manufacturing sector rebounded
with a growth of 6.5 per cent as compared with 1.3
per cent in 2022-23, boosted by higher profit margins
of corporates as input cost pressures tapered. Mining
and quarrying activity grew robustly due to higher
production of coal and natural gas. Electricity, gas,
water supply and other utility services registered
8.3 per cent growth in 2023-24 (9.0 per cent in
2022-23).
The services sector remained resilient, expanding
by 8.1 per cent in 2023-24 on the back of upbeat
construction activity and robust financial services.
Chart III.24: Weighted Contribution to
GVA Growth
Source: NSO.
62
State of the Economy
Aided by the government’s thrust on infrastructure
and an uptick in the residential housing sector, the
growth in construction accelerated further to 10.7 per
cent. Trade, hotels, transport, communication, and
services growth moderated to 6.3 per cent from 14.0
per cent in the preceding year. Financial, real estate,
and professional services remained strong in 2023-24
owing to sustained momentum in bank credit and
aggregate deposits. The performance of information
technology (IT) companies, however, moderated due
to the waning of global demand and higher attrition
across firms. The growth in public administration,
defence and other services (PADO) remained steady at
7.7 per cent aided by robust expenditure by the Union
and the State governments.
The prospects of the agriculture sector have
improved in recent weeks as the rabi sowing deficit
narrowed in December, supported by a late pick-
up in northeast monsoon rainfall (NEM) (October
01-December 31, 2023), which ended the season 9 per
cent below the long period average (LPA) (Chart III.25).
As of January 11, 2024 the all-India reservoir level was
at 57 per cent of total reservoir capacity, lower than
Chart III.25: Weekly Northeast Monsoon Rainfall
(October 01 - December 31, 2023)
Source: Indian Meteorological Department (IMD).
RBI Bulletin January 2024
State of the Economy ARTICLE

Chart III.26: Reservoir level Chart III.27: Rabi Acreage as on January 12, 2024
(as on January 11, 2024)

Source: Central Water Commission. Source: Ministry of Agriculture and Farmers’ Welfare.

the previous year’s as well as decadal average levels rice and wheat, respectively16. The rice procurement
(Chart III.26). under the kharif marketing season (KMS) 2023-24
stood at 355.3 lakh tonnes, as on January 10, 2024, 8.9
As on January 12, 2024, the total area sown
per cent lower than that during last year. Mandi prices
under rabi crops stood at 673.5 lakh hectares (104
per cent of full season normal area), 4.3 per cent
higher than the normal acreage but 0.7 per cent Chart III.28: Wheat Weekly Rabi Sowing
lower than that during the same period of the Progress 2023-24
previous year. The area under all major crops except
rice and pulses remained higher on a y-o-y basis
(Chart III.27).
Area sown under wheat, which accounts for
47 per cent of the rabi full season normal area, has
progressed well despite the initial lag caused due
to late harvesting of kharif crops (Chart III.28). The
IMD’s prediction of normal winter rainfall over north
India and below normal maximum temperatures over
many parts of the central and northwest India augur
well for wheat crop production.
As on January 01, 2024 the stock of foodgrains Source: Ministry of Agriculture and Farmers’ Welfare.
with the Food Corporation of India and other public
agencies was at 516.5 lakh tonnes (6.8 times the buffer 16 The buffer norm for rice and wheat for the January-March quarter is
norm) and 163.5 lakh tonnes (1.2 times the norm) for 76.1 lakh tonnes and 138 lakh tonnes, respectively.

RBI Bulletin January 2024 63

ARTICLE State of the Economy

Chart III.29: Wheat OMSS(D) and Daily Mandi Arrivals and Prices

Note: Dashed vertical line in Chart III.29 represents the day on which offloading limit per e-auction was revised to 0.4 million tonnes from 0.3 million tonnes.
Sources: Food Corporation of India; and Centre for Monitoring Indian Economy.

of wheat softened significantly during December
mainly due to aggressive offloading through e-auctions
under the Open Market Sale Scheme (OMSS) and a
host of other measures taken by the Government on
December 8, 202317 (Chart III.29). The government
has offloaded 58.7 lakh tonnes of wheat in e-auctions
conducted since June 28, 2023 (up to January 03, 2024).
The headline PMI for the manufacturing sector
moderated to 54.9 in December 2023 from 56.0 a
month ago due to a slowdown in new orders, output,
and employment (Chart III.30a). The PMI for services,
on the other hand, expanded to a three-month high
of 59.0 in December, supported by new business and
employment (Chart III.30b).

Chart III.30: Purchasing Managers’ Index (PMI)

a. Manufacturing b. Services

Source: S&P Global.

17 Government has lowered the stock limit for wheat for traders and wholesalers (from 2000 tonnes to 1000 tonnes) and for retailers (from 10 tonnes to
5 tonnes). It has revised the per e-auction offloading limit to 0.4 million tonnes from 0.3 million tonnes with immediate effect.

64 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart III.31: Port Cargo and Railway Traffic

a. Port Cargo b. Railway Freight Revenue

Source: India Port Association. Source: Rail Drishti.

Cargo traffic at major ports recorded a marginal
growth at 0.8 per cent, driven by decline in
cargo of POL (Chart III.31a). A pick-up in freight
movement of iron ore and coal also resulted in
railway freight revenue maintaining the momentum
(Chart III.31b).
The construction sector emitted mixed signals,
with steel consumption posting a growth in December
while cement production growth turning negative on
a high base in November 2023 (Chart III.32).
High frequency indicators for the services
sector remained robust in November/December 2023
(Table III.1).

Chart III.32: Steel Consumption and Cement Production

Sources: Joint Plant Committee; and Office of the Economic Adviser, Ministry of Commerce and Industry.

RBI Bulletin January 2024 65

ARTICLE State of the Economy

Table III.1: High-Frequency Indicators – Services

Growth (y-o-y, per cent)

Sector Indicator Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23

Urban demand Passenger Vehicles Sales 17.2 11.0 4.5 12.9 14.9 1.6 2.9 11.6 3.1 17.3 4.3 3.2

Two Wheeler Sales 5.0 7.6 7.7 15.1 17.4 1.7 -7.2 0.6 0.8 20.1 31.3 16.0
Rural demand Three Wheeler Sales 103.0 86.1 69.2 104.2 70.4 98.6 78.9 68.8 47.0 42.1 30.8 30.6
Tractor Sales 24.4 20.0 13.7 -11.1 1.2 4.2 6.1 1.1 -14.7 -4.3 6.4 -19.8
Commercial Vehicles Sales 11.8 -3.3 6.9 3.2
Railway Freight Traffic 3.8 3.6 3.8 3.5 1.9 -1.9 1.5 6.4 6.7 8.5 4.3 6.4
Port Cargo Traffic 12.2 12.0 1.5 1.3 3.5 0.4 4.3 4.4 0.3 13.8 17.0 0.8
Domestic Air Cargo Traffic* 2.4 8.1 3.3 7.6 -4.5 -5.6 -4.1 6.0 -4.5 10.6 9.0 -2.6
International Air Cargo Traffic* -7.5 -1.7 0.3 -4.8 2.7 2.7 1.0 7.4 2.7 15.0 4.9 16.3
Domestic Air Passenger Traffic * 96.8 57.4 21.6 22.6 15.7 19.2 26.3 23.6 19.3 10.7 8.7 8.1
Trade, hotels,
transport, International Air Passenger Traffic * 121.9 109.3 60.9 43.0 37.2 26.5 23.6 21.5 19.6 17.5 19.8 17.6
communication
GST E-way Bills (Total) 19.7 18.4 16.3 12.2 19.7 15.5 16.4 19.5 9.5 30.5 8.5 13.2
GST E-way Bills (Intra State) 24.1 22.2 20.7 16.2 23.0 18.8 20.8 22.6 12.4 30.0 22.7 14.2
GST E-way Bills (Inter State) 12.8 12.4 9.3 5.9 14.3 9.9 9.1 14.4 4.9 31.2 -16.2 11.4
Hotel occupancy rate@ 64.9 71.2 62.7 63.2 61.9 64.0 60.9 60.9 61.0 62.5 63.0
Average revenue per room 53.1 62.0 39.6 21.2 15.8 14.0 14.2 13.9 18.3 14.8 15.9
Tourist Arrivals 330.8 259.4 132.5 53.7 41.3 24.0 13.6 22.6 17.5 19.8 16.8
Steel Consumption 7.7 14.6 15.0 8.4 8.6 16.7 15.8 16.0 18.6 13.6 15.6 6.4
Construction
Cement Production 4.7 7.4 -0.2 12.4 15.9 9.9 6.9 19.7 4.6 17.4 -3.6

PMI Index# Services 57.2 59.4 57.8 62.0 61.2 58.5 62.3 60.1 61.0 58.4 56.9 59.0

Note: : #: Data in levels. *: Data are based on the monthly average of daily figures. @: Data in rates.
Sources: CMIE; CEIC; IHS Markit; SIAM; Airports Authority of India; and Joint Plant Committee.

Inflation registered a positive momentum of 17 bps and the

Headline inflation, as measured by y-o-y
changes in the all-India consumer price index
(CPI)18, edged up to 5.7 per cent in December 2023
from 5.6 per cent in November (Chart III.33). The
14 bps increase in inflation came primarily from
an unfavourable base effect of around 50 basis
points which more than offset a negative price
momentum of around 30 bps. The negative
momentum in overall CPI was on account of a
m-o-m decline in food prices by 73 bps. Fuel prices
core group (i.e., excluding food and fuel) witnessed a
momentum of just 3 bps.
Food inflation (y-o-y) increased to 8.7 per cent
in December from 8.0 per cent in November, as
negative momentum was more than offset by an
unfavourable base effect. In terms of sub-groups,
inflation in vegetables increased sharply for the
second consecutive month while it moderated in
respect of cereals, meat and fish, eggs, spices, milk
and non-alcoholic beverages. Inflation in fruits,

18 As per the provisional data released by the NSO on January 12, 2024.

66 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart III.33: Trends and Drivers of CPI Inflation

a. CPI Inflation (y-o-y) b. Contributions

Sources: National Statistical Office (NSO); and RBI staff estimates.

pulses and prepared meals remained steady, while The fuel and light group recorded a larger deflation
edible oil prices continued to record deflation of (-) 1.0 per cent in December as compared with (-)
(Chart III.34). 0.8 per cent in November mainly driven by a steep

Chart III.34: Annual Inflation (y-o-y) and Momentum (m-o-m) across Sub-groups

Sources: NSO; and RBI staff estimates.

RBI Bulletin January 2024 67

ARTICLE State of the Economy

Chart III.35: Annual Inflation across Sub-groups (December 2023 versus November 2023)

Sources: NSO; and RBI staff estimates.

deflation in kerosene (PDS) prices and moderation in Sugar price inflation rose from near zero in
firewood and other cooking fuel prices on a y-o-y basis. December 2022 to 7.9 per cent in December 2023
While LPG prices remained in double digit deflation, (Chart III.37). Domestic mills produced 11.2 million
electricity price inflation remained in double digits
(y-o-y).
Chart III.36: Spatial Distribution of Inflation
Core inflation moderated to 3.8 per cent in December 2023 (CPI-Combined, y-o-y, per cent)
December, its lowest print in more than 4 years, from
4.1 per cent in November. The moderation was broad-
based, with sub-groups such as clothing and footwear,
household goods and services, health, education,
personal care and effects, and pan tobacco and
intoxicants recording a decline. Inflation in housing,
transport and communication, and in recreation and
amusement remained steady (Chart III.35).
In terms of regional distribution, rural inflation
stood at 5.9 per cent, marginally higher than urban
inflation (5.5 per cent) in December 2023. Majority
of the states faced inflation less than 6 per cent Note: Map is for illustrative purposes only.
Sources: NSO; and RBI Staff estimates.
(Chart III.36).

68 RBI Bulletin January 2024

State of the Economy
Chart III.37: Sugar Price Inflation
Note: Data are for ‘Sugar-other sources’ with weight of 1.1 in headline CPI.
Sources: NSO; and RBI Staff estimates.
tonnes of sugar during October-December 2023,
which was lower than 12.1 million tonnes produced
during the corresponding period last year. To ensure
adequate supply of sugar in the domestic market,
the Government has continued the export ban on
sugar and also limited the production of ethanol
Chart III.38: Onion Daily Mandi Arrivals and Prices
Note: Dashed vertical line is the export ban imposed by the government on December 07, 2023.
Sources: Food Corporation of India and Centre for Monitoring Indian Economy.
RBI Bulletin January 2024
ARTICLE
from sugarcane juice and B-heavy molasses to 1.7
million tonnes during the 2023-24 sugar season
so far.
In case of onion, mandi prices which were
increasing significantly, crashed in December
on account of increased arrivals from fresh crop
harvesting as well as the export ban imposed by the
government on December 07, 2023 (Chart III.38).
The government has also been augmenting supply by
way of aggressive disposal of onion through National
Cooperative Consumers’ Federation of India limited
(NCCF), National Agricultural Cooperative Marketing
Federation of India limited (NAFED), and Kendriya
Bhandar and State cooperatives at ` 25 per kg from a
procured stock of 5.1 lakh tonnes. The government
has set a procurement target of 7 lakh tonnes for
onion during 2023-24.
High frequency food price data for January 2024 so
far (up to 12th) indicate that prices of cereals remained
steady while prices of pulses and edible oils registered
a broad-based decline. Among key vegetables, tomato
69
ARTICLE State of the Economy

Chart III.39: DCA Essential Commodity Prices

a. Cereals b. Pulses

c. Vegetables d. Edible Oils (packed)

Sources: Department of Consumer Affairs, GoI; and RBI staff estimates.

and onion prices continued to correct in January
(Chart III.39).
Retail selling prices of petrol and diesel in the
four major metros remained steady in January 2024
so far (up to 12th). Kerosene and LPG prices were also
kept unchanged in January so far (Table III.2).
The PMIs for December 2023 indicated that input
cost increases in manufacturing remained rangebound
from November levels while for services it registered
a softening. Selling prices recorded a marginal decline
in December for manufacturing while it picked up
gradually in the services sector (Chart III.40).

Table III.2: Petroleum Products Prices

Item Unit Domestic Prices Month-over-month
(per cent)
Jan-23 Dec-23 Jan-24^ Dec-23 Jan-24^
Petrol `/litre 102.92 102.92 102.92 0.0 0.0
Diesel `/litre 92.72 92.72 92.72 0.0 0.0
Kerosene (subsidised) `/litre 53.67 52.09 52.09 -5.7 0.0
LPG (non-subsidised) `/cylinder 1063.25 913.25 913.25 0.0 0.0

^: For the period January 1-12, 2024.

Note: Other than kerosene, prices represent the average Indian Oil Corporation Limited (IOCL) prices in four major metros (Delhi, Kolkata, Mumbai and
Chennai). For kerosene, prices denote the average of the subsidised prices in Kolkata, Mumbai and Chennai.
Sources: IOCL; Petroleum Planning and Analysis Cell (PPAC); and RBI staff estimates.

70 RBI Bulletin January 2024

State of the Economy
Chart III.40: PMI: Input and Output Prices
a. Manufacturing
Source: S&P Global.
IV. Financial Conditions
The usual quarter end advance tax outflows and the
monthly GST payments resulted in a large withdrawal
of liquidity from the banking system in mid-December.
In response, the Reserve Bank conducted five fine-
tuning variable rate repo (VRR) auctions (in lieu of the
main operation) of 2-7 days maturity amounting to `5.5
lakh crore and a main operation (13 days) amounting to
`1.75 lakh crore during December 16, 2023-January 14,
Chart IV.1: Liquidity Operations
Source: RBI.
RBI Bulletin January 2024
ARTICLE
b. Services
2024. Banks also took recourse to the marginal standing
facility (MSF) and borrowed nearly `0.89 lakh crore on
an average basis during December 16, 2023-January
14, 2024. A pick up in government spending towards
the month-end and early January ameliorated the
pressure on liquidity with a commensurate decline in
MSF borrowings. Overall, the Reserve Bank injected
liquidity averaging on a net basis `1.8 lakh crore during
December 16, 2023-January 14, 2024 (Chart IV.1).
71
ARTICLE
Chart IV.2: Policy Corridor and Money Market Rates
a. Policy Corridor and Call Rate
Sources: RBI; CCIL; and Bloomberg.
Reflecting these developments, the weighted
average call rate (WACR) – the operating target of
monetary policy – averaged 6.71 per cent during
December 16 - January 12, 2024 (Chart IV.2a). Rates in
the collateralised segment – the triparty and market
repo rates – ruled above the MSF rate (Chart IV.2b).
In the term money segment, the yield on 3-month
commercial paper (CP) for non-banking financial
companies (NBFCs) stayed elevated in the aftermath
of regulatory measures on consumer credit and bank
credit to NBFCs announced on November 16, 2023.19
The yield on 3-month certificates of deposit (CDs) also
hardened as banks resorted to higher CD issuances to
meet funding requirements.
In the primary market, fund mobilisation through
issuances of CDs rose to `5.6 lakh crore during 2023-
24 (up to December 2023), higher than `4.9 lakh
crore a year ago. In December 2023, banks issued
CDs over `1.0 lakh crore – the highest in any month
during the current financial year - to bridge the gap
19 State of the Economy, RBI Bulletin, December 2023.
72
State of the Economy
b. Money Market Rates
between credit growth and trailing deposit growth.
CP issuances at `10.0 lakh crore (up to December
2023) against `10.5 lakh crore in the same period
a year ago.
The yield on the 10-year G-sec benchmark yield
marginally firmed up to 7.18 per cent on January 12
from 7.16 per cent on December 15 (Chart IV.3a). The
yield curve shifted upwards with relatively sharper
increase in yields across the mid to the long end of
the curve (Chart IV.3b).
Taking cues from G-sec yields, corporate
bond yields and associated risk premia generally
increased during December 16, 2023-January 12, 2024
(Table IV.1). Overall, corporate bond issuances during
2023-24 (up to November) were higher at `5.0 lakh
crore as compared with `3.9 lakh crore a year ago.
Reserve money (RM), excluding the first-round
impact of change in the cash reserve ratio (CRR),
recorded a growth of 6.3 per cent (y-o-y) as on
January 5, 2024 (9.3 per cent a year ago) [Chart IV.4].
Growth in currency in circulation (CiC), the largest
component of RM, decelerated to 3.8 per cent from
RBI Bulletin January 2024
State of the Economy ARTICLE

Chart IV.3: Developments in the G-sec Market

a. Movement in 10-year G-sec Yield b. G-sec Yield Curve

Sources: Bloomberg; CCIL; and RBI staff estimates.

7.9 per cent a year ago, reflecting the withdrawal of
`2000 banknotes.20
Money supply (M3) rose by 10.9 per cent (y-o-y)
as on December 29, 2023 (8.7 per cent a year ago).21
Aggregate deposits with banks, the largest component
of M3, increased by 12.0 per cent (8.7 per cent a year
ago). SCBs’ credit growth stood at 15.6 per cent as
on December 29, 2023 (14.9 per cent a year ago)
[Chart IV.5].

Table IV.1: Financial Markets - Rates and Spread The deposit growth of SCBs (excluding the impact
Instrument Interest Rates (per cent) Spread (basis points) of the merger), which witnessed an increase in the
(Over Corresponding Risk-
free Rate)
Nov 16, Dec 16, Variation Nov 16, Dec 16, Variation Chart IV.4: Reserve Money and Currency in
2023 – 2023 – 2023 – 2023 – Circulation
Dec 15, Jan 12, Dec 15, Jan 12,
2023 2024 2023 2024
1 2 3 (4 = 3-2) 5 6 (7 = 6-5)
Corporate Bonds
(i) AAA (1-year) 7.90 8.02 12 64 79 15
(ii) AAA 7.75 7.95 20 40 76 36
(3-year)
(iii) AAA 7.92 9.97 5 55 75 20
(5-year)
(iv) AA (3-year) 8.40 8.60 20 105 140 35
(v) BBB- (3-year) 12.03 12.24 21 468 504 36

Note: Yields and spreads are computed as monthly averages.

Sources: FIMMDA; and Bloomberg.

20 Announced on May 19, 2023.

21 excluding the impact of the merger of a non-bank with a bank (with Source: RBI.
effect from July 1, 2023).

RBI Bulletin January 2024 73

ARTICLE
Chart IV.5: M3 Growth and Credit Growth of SCBs - Base and Momemtum Effect
Source: RBI
wake of withdrawal of `2000 banknotes, remained in
double digits in December (Chart IV.6).
During June 2022-May 2023, the incremental
credit-deposit ratio rose above 100 per cent, but has
been declining thereafter. As on December 29, 2023
incremental credit-deposit ratio stood at 93.5 per cent,
above its decadal average of 77.1 per cent (Chart IV.7).
Chart IV.6: SCBs’ Aggregate Deposits and Credit
Growth - Wedge
Source: RBI.
74
State of the Economy
With the statutory requirements for CRR and
statutory liquidity ratio (SLR) at 4.5 per cent and 18
per cent, respectively, around 77.0 per cent of deposits
were available with the banking system for credit
expansion as on December 29, 2023 (Chart IV.8).
In response to the 250 bps hike in the policy repo
rate, SCBs increased their external benchmark based
Chart IV.7: Incremental Credit-Deposit Ratio
Source: RBI.
RBI Bulletin January 2024
State of the Economy
Chart IV.8: Certificates of Deposit (CDs) and
Commerical Paper (CPs) - Fortnightly Issuances
Source: RBI.
lending rates (EBLRs) by a similar magnitude, while the
1-year median marginal cost of funds based lending
rate (MCLR) increased by 155 bps during the period
May 2022–December 2023 (Chart IV.9). Concomitantly,
the weighted average lending rate (WALR) on fresh
and outstanding rupee loans increased by 183 bps
and 108 bps, respectively, during May 2022-November
2023. On the deposit side, the weighted average
Chart IV.10: Transmission across Bank-groups (May 2022 to November 2023)
a. Deposit Rates
Note: Data on 1-year median MCLR pertain to May 2022 to December 2023 period.
Source: RBI staff estimates.
RBI Bulletin January 2024
ARTICLE
Chart IV.9: Transmission to Banks Deposit and
Lending Rates (May 2022 to November 2023)
Note: Data on 1-year median MCLR and EBLR pertain to May 2022 to December
2023 period.
Source: RBI staff estimates.
domestic term deposit rates (WADTDRs) on fresh and
outstanding rupee deposits increased by 231 bps and
175 bps, respectively, during the same period.
Transmission across bank groups during May
2022 to November 2023 to deposit rates was higher
in the case of public sector banks (PSBs) (Chart IV.10).
The lending rates of PSBs, however, remained lower
than those of private sector banks (PVBs).
b. Lending Rates
75
ARTICLE State of the Economy

Chart IV.11: Interest Rates on Small Savings Instruments

Sources: Government of India; and RBI staff estimates.

The Government of India revised rates on select
small saving instruments, viz., 3-year time deposit
and Sukanya Samriddhi Account Scheme upwards by
10 bps and 20 bps, respectively, during Q4:2023-24
while keeping rates constant for others (Chart IV.11).
The BSE Sensex scaled fresh highs in the second
half of December 2023, tracking positive global cues
on risk-on sentiment amidst growing expectations of
rate cuts by central banks in AEs and robust foreign
portfolio investment (FPI) inflows. The benchmark
index closed above the 72,000 mark for the first time
on December 27, 2023 and ended 2023 with an annual
gain of 18.7 per cent. The BSE Sensex increased for
the eighth consecutive year on a calendar year basis
amidst a broad-based rally led by cyclical sectors like
realty and capital goods (Chart IV.12). Markets started

Chart IV.12: Broad-Based Rally in Equity Markets in 2023

a. Broad Indices b. Sectoral Indices

Source: Bloomberg.

76 RBI Bulletin January 2024

State of the Economy ARTICLE

the year 2024 on a negative note as sentiments were

Chart IV.13: Resource Mobilisation by SMEs
dented by the intensification of Red Sea disruptions through Equity Issues
and caution ahead of the quarterly corporate
earnings season. Thereafter, the markets registered
continuous gains amid mixed global cues and better
than expected quarterly result announcements by
Information Technology companies. Overall, the
BSE Sensex gained 9.5 per cent since end-November
2023 to close at an all-time high of 73,328 on January
15, 2024.
Domestic capital markets deepened further in
2023, marked by a rise in turnover, size, and investor
participation (Table IV.2). The year also marked
operational upgrades to the settlement cycle in
domestic equity markets with further ambition to
introduce T+0 and instant settlement of trades.22 Source: SEBI.

The primary market remained vibrant in

December 2023, with 31 firms raising `9,534 crore
through initial public offerings (IPOs). The small and
medium enterprises (SME) segment also exhibited
significant activity in the current financial year
(Chart IV.13). As per ernst and young’s (EY’s) Global
IPO Trends 2023 report, India has grown its share of
global IPO volume from 6 per cent and 11 per cent
in 2021 and 2022, respectively, to 17 per cent in
2023. The primary market is expected to gain further
momentum in 2024.23
Indian markets currently hover around lifetime
highs with relatively high valuations in comparison
with its peers (Chart IV.14). While this reflects
expectations of strong growth in the overall economy,
healthy corporate earnings will be key to sustaining
these levels.
Gross inward foreign direct investment (FDI)
declined by 4.1 per cent to US$ 47.0 billion during

Table IV.2: Developments in Capital Markets During 2023

(` crore, except demat accounts, which is in crore)

2022 2023 Per cent change

Average Monthly SIP Contribution 12,453 15,312 23.0

Number of Demat Accounts (end-period) 10.8 13.9 28.7
Market Capitalisation of BSE (end-period) 2,82,38,248 3,64,28,846 29.0
Asset Under Management of Mutual Funds (end-period) 39,88,735 50,77,900 27.3
Equity Derivatives Turnover 3,11,53,48,591 7,23,15,81,303 132.1
Cash Market Turnover 1,52,10,804 1,75,87,721 15.6

Note: Equity derivatives and cash market turnover pertain to both BSE and NSE combined.
Sources: SEBI, NSE, BSE, AMFI and RBI staff calculations.

22 https://www.sebi.gov.in/reports-and-statistics/reports/dec-2023/consultation-paper-on-introduction-of-optional-t-0-and-optional-instant-settlement-of-
trades-in-addition-to-t-1-settlement-cycle-in-indian-securities-markets-_80204.html
23 https://www.reuters.com/world/india/indias-ipo-momentum-seen-growing-prospects-political-stability-2023-12-19/

RBI Bulletin January 2024 77

ARTICLE State of the Economy

Chart IV.14: 12-Month Forward PE Ratio

Source: Bloomberg.

April-November 2023 as compared with US$ 49.0
billion during the corresponding period a year
ago (Chart IV.15a). Manufacturing, electricity and
other energy sectors, transport, financial services,
and retail and wholesale trade contributed around
two-thirds of the gross inward FDI equity flows.
The bulk of the equity inflows (69.9 per cent) were
received from Mauritius, Singapore, Japan, the US
and the Netherlands during the same period. Net FDI
moderated to US$ 13.5 billion during April-November
2023 from US$ 19.8 billion a year ago, primarily due to
a fall in gross inward FDI and a rise in repatriation of
equity capital. As reported by fDi Intelligence24, India
is among the top 10 countries of the world, with the

Chart IV.15: Foreign Direct Investment Flows

a. Gross and Net FDI - India b. 2024 FDI Momentum Index (Top 10 Countries)*

Note: *: Values in bracket indicate 2024 FDI momentum index score.

Sources: RBI; and fDi Intelligence.

24 A specialist division from the Financial Times that provides a comprehensive offering of services related to foreign direct investment.

78 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart IV.16: Net Portfolio Investments

a. India b. Equity Flows to India and Peer Economies (December 2023)

Notes: 1. Debt includes investments under the voluntary retention route and hybrid instruments.
2. *: Data up to January 12, 2024.
Sources: National Securities Depository Limited; and Institute of International Finance.

strongest expected investment momentum in 2024 November 2023 were higher than in the corresponding
(Chart IV.15b). period last year. On the other hand, ECB outflow
Supported by the buoyant growth outlook, on account of principal repayment stood at US$
India recorded net FPI inflows of US$ 9.5 billion in 17.3 billion during this period, thereby resulting in
December 2023 – a 37-month high – led by equity positive inflows during the year so far. On a quarterly
inflows and complemented by inflows in debt segment basis, however, net ECB flows have turned negative
(Chart IV.16a). Equities recorded multi-month high during Q2:2023-24 and Q3:2023-24 (so far) after two
net inflows of US$ 7.0 billion, the highest among quarters of net inflows (Chart IV.17).
comparable emerging market peers in December
2023 (Chart IV.16b). Financial services registered the
Chart IV.17: External Commercial Borrowings -
highest investment inflows during the month. FPIs Registrations and Flows
invested US$ 0.9 billion in January 2024 (up to 12th)
in Indian capital markets. During 2023-24 so far (up to
January 12, 2024), net FPI inflows to India were to the
tune of US$ 32.7 billion, the highest since 2015-16,
barring the high witnessed during 2020-21.
Net accretions to non-resident deposits increased
to US$ 7.3 billion during April-November 2023 from
US$ 3.6 billion a year ago, mainly due to a rise in net
accretions to Foreign Currency Non-Resident [FCNR(B)]
accounts and Non-Resident (External) Rupee Accounts
[NR(E)A].
On a cumulative basis, external commercial
borrowing (ECB) registrations (US$ 30.9 billion) Source: RBI.
and disbursements (US$ 23.2 billion) during April-

RBI Bulletin January 2024 79

ARTICLE
Chart IV.18: End-use of the Registered ECBs
Source: RBI.
Of the total ECBs registered during April-
November 2023, three-fourth of the agreements
were related to capital expenditure (Chart IV.18).
The weighted average maturity of ECBs registered
elongated to 5.8 years (5.3 years in April-November
Chart IV.19: Overall Cost of ECBs
Source: RBI.
25 Currency Composition of Official Foreign Exchange Reserves (COFER), International Financial Statistics (IFS).
80
State of the Economy
2022), reflecting borrowers’ lower exposure to roll-
over risk.
Benchmark global rates have been rising – the
secured overnight financing rate (SOFR) increased
further by 52 bps during April-November 2023 after
459 bps rise during 2022-23. In comparison, the rise in
overall cost of ECB loans has been relatively moderate
as the weighted average interest rate spread of ECBs
(over the benchmark interest rate) came down to 155
bps from 169 bps a year ago (Chart IV.19).
The foreign exchange reserves stood at US$
617.3 billion on January 5, 2024, the equivalent of
10.6 months of imports projected for 2023-24 and
97 per cent of total external debt outstanding at end-
September 2023 (Chart IV.20a). India added US$ 59.7
billion to its foreign exchange reserves during the
calendar year 2023, which is the third highest among
major foreign exchange reserves holding countries.
According to the IMF’s Currency Composition of
Official Foreign Exchange Reserves (COFER)25, global
foreign exchange reserves in Q3:2023 dropped to
RBI Bulletin January 2024
State of the Economy ARTICLE

Chart IV.20: Foreign Exchange Reserves

a. India’s Foreign Exchange Reserves b. World’s Official Foreign Exchange Reserves

Note: *: Data for January 5, 2024.

Sources: RBI; and Currency Composition of Official Foreign Exchange Reserves (COFER), IMF.

their lowest level since Q4:2022. Besides, the share The Indian rupee (INR) appreciated moderately
of the US dollar in global reserves has declined since by 0.02 per cent (m-o-m) vis-à-vis the US dollar in
1999 from 71.0 per cent to 59.2 per cent in Q3:2023 December 2023. Moreover, the INR was one of the
(Chart IV.20b). least volatile currencies (Chart IV.21).

Chart IV.21: Movements of Indian Rupee and Major Currencies against the US Dollar
(December 2023 over November 2023)

Note: US dollar (DXY) measures the movements of the US dollar against a basket of major currencies (Euro, Japanese yen, British pound, Canadian dollar, Swedish krona,
Swiss franc).
Sources: FBIL; Thomson Reuters; and RBI staff estimates.

RBI Bulletin January 2024 81

ARTICLE State of the Economy

Chart IV.22: Movements in the 40-Currency Real Effective Exchange Rate

a. Monthly Changes b. Decomposition of Monthly Changes

Source: RBI..

The INR depreciated by 1.2 per cent (m-o-m) in
terms of 40-currency real effective exchange rate
(REER) in December 2023 (Chart IV.22).
India’s current account deficit (CAD) narrowed to
1.0 per cent of GDP in Q2:2023-24 from 1.1 per cent
in Q1:2023-24 with an improvement in net services
earnings and an increase in net transfers receipts
(Chart IV.23). With net capital inflows - dominated
by foreign portfolio investment and banking capital
exceeding the CAD, there was an accretion of foreign

Chart IV.23: India’s Balance of Payments (BoP)

Source: RBI.

82 RBI Bulletin January 2024

State of the Economy ARTICLE

Chart IV.24: External Vulnerability Indicators Chart IV.25: Movement of Net International
of India Investment Position (IIP)

Note: RM: Residual maturity; IIP: International investment position.

Source: RBI.
Sources: RBI; and Government of India.

exchange reserves to the tune of US$ 2.5 billion (on a
BoP basis) during the quarter.
Key indicators of external sector vulnerability
remained at sustainable levels at end-September
2023. During Q2:2023-24, while India’s debt service
ratio declined, the short-term debt (on residual
maturity basis) to foreign exchange reserves ratio
increased moderately. The ratio of India’s external
debt and net international investment position (IIP)
to GDP at end-September 2023 remained at the same
level as in the previous quarter (Chart IV.24).
India’s net international liability position
increased marginally by US$ 1.4 billion during
Q2:2023-24 to US$ 381 billion in September 2023
Gross Settlement (RTGS) showed accelerated growth
(y-o-y) in value terms. The National Electronic Funds
Transfer (NEFT) recorded growth in both transaction
volume and value, higher than in the preceding year.
On the retail side, the Unified Payments Interface
(UPI) processed 12 billion transactions in the month,
an additional billion within two months. The
average ticket size of transactions under the Bharat
Bill Payment System (BBPS) expanded strongly
in the month, driven by sharp growth (y-o-y) in
Table IV.3: Growth in Select Payment Systems
(y-o-y in per cent)
Payment Transaction Volume Transaction Value
System
Indicators Nov-22 Nov-23 Dec-22 Dec-23 Nov-22 Nov-23 Dec-22 Dec-23

(Chart IV.25). Gross financial liabilities to non- RTGS 19.9 6.2 11.5 7.1 11.9 10.6 5.9 15.7

residents stood at US$ 1,314 billion of which 71 per NEFT 29.3 45.7 29.0 37.5 18.0 17.5 9.4 13.0

cent was covered by Indian residents’ overseas assets. UPI 74.6 53.7 71.4 53.5 54.9 46.1 55.0 42.2
IMPS 12.5 1.9 9.7 2.7 24.7 17.7 22.7 17.2
Reserve assets accounted for 63.0 per cent of India’s
NACH 6.7 65.9 10.5 10.9 35.9 27.2 34.5 4.6
total international financial assets.
NETC 33.4 12.3 27.2 13.0 46.2 14.1 34.3 18.6
Payment Systems BBPS 59.2 29.5 60.4 25.7 61.7 66.7 63.6 77.4
Note: RTGS: Real Time Gross Settlement; NEFT: National Electronic Funds
Digital transactions advanced across various Transfer; UPI: Unified Payments Interface; IMPS: Immediate Payment
payment modes in December 2023 (Table IV.3). Service; NACH: National Automated Clearing House; NETC: National
Electronic Toll Collection; BBPS: Bharat Bill Payment System.
Wholesale transactions through the Real Time Source: RBI.

RBI Bulletin January 2024 83

ARTICLE State of the Economy

value of transactions. Fuelled by a rising share of V. Conclusion

online shoppers from areas beyond tier-2 centres26, A leap year is a catch-up with solar time – if
e-commerce transactions led the growth in the credit there were no leap years, then over a hundred
card segment with a substantial rise in their value years, summers would be cold and springs would
in November 2023. This growth was complemented be full of rain. Four years ago, the world suffered
by a 19 per cent (y-o-y) increase in the number of a catastrophic loss of lives and livelihood, with
outstanding credit cards. decades of progress erased. In the following year,
On the supply side, the payment infrastructure deadlier mutations of the COVID-19 virus stalked the
exhibited healthy growth, attributable to increases in earth, but humanity was learning to cope in spite of
point-of-sale (PoS) devices, micro-ATMs, quick response higher mortality - the swift development of effective
(QR) codes and credit cards. Having deployed close to vaccines against COVID-19 was an unprecedented
scientific achievement. In 2022, globalisation was
8.3 lakh physical and 2.7 crore digital PoS devices under
rent asunder as geopolitics cried havoc and let slip the
the Payment Infrastructure Development Fund (PIDF)
dogs of war.30 In its slipstream came the scourge of
Scheme, the Reserve Bank has extended the scheme
inflation and the pursuit of national self-interest as
by a further period of two years and widened its
countries realigned supply chains and sources of key
scope of beneficiaries and acceptance infrastructure.
materials. These centrifugal forces have brought in
These enhancements include beneficiaries of PM
their train high financial volatility but also a doughty
Vishwakarma Scheme as merchants, provision of
tenacity and path-breaking technological revolution
uniform subsidy across devices for special focus areas
embodying the simulation of human intelligence. In
and making soundbox devices and Aadhaar-enabled
2024, we must take a leap of faith, recover the losses
biometric devices eligible for subsidy claims under the of these years gone by and prevail over the formidable
Scheme.27 downside risks that are seen over the horizon.
Going ahead, UPI adoption is expected to rise The weak global outlook can be brightened if
with the UPI Tap and Pay going live, and the launch geopolitical conflicts end and their repercussions
of UPI for the secondary market. As a major thrust through commodity and financial markets, trade and
to the digital ecosystem, India’s Central Bank Digital transportation, and supply networks are contained.
Currency (CBDC) exceeded 10 lakh transactions per Inflation must be vanquished, paving the way for
day in the last week of December 2023. Overall, the financial conditions to ease in support of growth. The
digital payment ecosystem is poised for sustained adverse effects of climate change must be addressed.
growth, driven by a sharp increase in active FinTech Re-globalisation must commence. AEs need to
app users28, deepening adoption of the Account resuscitate growth impulses and boost consumption
Aggregator Framework29, and the continued expansion and investment as the lingering effects of past price
of the e-commerce market. shocks dissipate. In EMEs, investment has to be
rekindled and the ongoing weakening of potential
growth and productivity reversed to open up space
26 Flipkart| Bain & Company, Inc. 2023. How India Shops Online 2023. to address issues relating to high debt levels and
27 h t t p s : / / w w w. r b i . o r g . i n / S c r i p t s / B S _ P r e s s R e l e a s e D i s p l a y. macroeconomic stability.
aspx?prid=57021
28 Flipkart| Bain & Company, Inc. 2023. How India Shops Online 2023.
29 The number of accounts linked and consent requests under Account
Aggregator Ecosystem grew by 730 per cent and 561 per cent, respectively, 30Adapted from Mark Antony’s lines in Julius Caesar by William
in December 2023 (https://sahamati.org.in/aa-dashboard/). Shakespeare, Act III Scene 1.

84 RBI Bulletin January 2024

State of the Economy
In India, potential output is picking up with actual
output running above it, although the gap is moderate.
In 2024-25, the objective should be to sustain this
momentum by securing real GDP growth of at least 7
per cent in an environment of macroeconomic stability.
Accordingly, inflation needs to align with the target by
the second quarter of the year, as projected, and get
anchored there. Balance sheets of financial institutions
need to be strengthened and asset quality improved
even further. The ongoing consolidation of fiscal and
external balances needs to continue. The gains of the
transformative technological change that is underway
must be harnessed for inclusive and participative
31Speech by Governor Shri Shaktikanta Das on November 22, 2023.
“Winning in Uncertain Times: The Indian Experience”. at the FIBAC 2023
Conference organised jointly by FICCI and IBA at Mumbai.
RBI Bulletin January 2024
ARTICLE
growth in a sound risk-free environment. Above all,
the virtuous thrust to investment from government
capex must be partnered and even led by the corporate
sector, supplemented by foreign direct investment.
In the words of Shri Shaktikanta Das, Governor,
“new opportunities are knocking at our doors. It is
for us to capitalise on them. There has to be a greater
focus on investment in capacity building, skilling of
human resources and adoption of newer technology
by all players. The international confidence on India’s
prospects is at a new high; it is an opportune time to
make this India’s moment and work towards strong,
sustainable and inclusive growth.”31
85
Are Food Prices the ‘True’ Core of India’s Inflation? ARTICLE

Are Food Prices the ‘True’ Core its delayed onset; torrential rainfall in July; and
historic dry conditions in August); and strengthening
of India’s Inflation? El Nino conditions – suggests that food inflation in
by Michael Debabrata Patra, Joice John and India may be acquiring a structural character. Second,
the weaponisation of food as a consequence of geo-
Asish Thomas George^
political conflict and restrictive trade practices
embedded in geo-economic fragmentation is
The recent experience with the prolonged elevation in
resulting in large spillovers propagating into non-
food prices in India has motivated our investigation into
food inflation and across geographies. These forces
core-like properties of food inflation, namely volatility,
are causing headline inflation in India to diverge,
persistence, spillovers and cyclical sensitivity. We find that
often persistently, from its target of 4 per cent. On
there are times when some of these properties are satisfied.
the other hand, non-food non-fuel inflation has been
Hence, wielders of monetary policy need to ascertain
responding albeit unevenly and laggedly to monetary
the sources and nature of food price shocks, while being
policy and to easing input costs, gravitating towards
mindful of the risks of overreaction to transitory shocks
as well as of the dangers of ignoring persistent food price 4 per cent. This is noteworthy, since it constitutes
shocks. the significant other half of headline inflation that is
widely believed to lie within the realm of influence of
Introduction
monetary policy; food inflation is generally considered
In the wake of the pandemic – and exacerbated to be outside its ambit.
by the war in Ukraine – the intersecting incidence of
An influential strand in the literature has argued
food price spikes has had an overbearing influence
that in emerging and developing economies in which
on headline inflation in India. Widely regarded as
food price inflation is more volatile and on an average
transient, these shocks appear to have imparted
higher than non-food inflation, a policy focus on
volatility and persistence to food inflation which
measures of inflation that exclude or minimise the
averaged 6.7 per cent during April 2022 to November
influence of food prices can result in a misspecification
2023. Moreover, food has a weight of 45.9 per cent
bias in forecasts, unhinged inflation expectations and
in the consumer price index (CPI) but its contribution
lags in policy responses (Walsh, 2016). This is not
to overall inflation has increased from 48 per cent
just an issue relating to the greater weight of food in
in April 2022 to 67 per cent in November 2023. Two
the consumption basket but also of the relationship
features stand out in this experience. First, the rising
between food and non-food prices (Cecchetti, 2007).
vulnerability of food prices to climate change – the
If food inflation rises faster and remains more
heat wave during March-May 2022; crop production
persistent than a measure of inflation that excludes
shortfalls due to uneven south-west monsoons; La
food, the measurement of underlying inflation will be
Nina conditions for the third year in a row impacting
biased significantly downwards – means do matter,
rainfall patterns in the post-monsoon season;
not just volatility and persistence, in maximising
unseasonal rainfall and hailstorms in March 2023;
the signal to noise ratio that is the raison d’etre of
temporal monsoon variability in 2023 (which included
any measure of core inflation. Measures that exclude
food are also found to not perform well in terms of
^
The authors are from the Reserve Bank of India. The views expressed
predictive power in country specific cases (Rich and
in this article are those of the authors and do not represent the views of
the Reserve Bank of India. Steindad, 2007; Alvarez et al. 2006). Furthermore, in

RBI Bulletin January 2024 87

ARTICLE
the context of international commodity price cycles, it
has been observed that mechanisms transmitting food
price shocks may be changing – in many countries,
headline inflation is not reverting to core in the same
degree it did earlier, implying that secular forces may
be at work (Anand and Prasad, 2010; Catao and Chang,
2015; Walsh, 2016).
Against this backdrop and the recent experience
of persistence of elevated food prices in India, the
appropriate monetary policy response would be
conditioned by the question: will relative prices adjust
without any spillovers so that the monetary policy
reaction can be to look through food price movements
on the grounds that they are supply-driven and
transitory in nature? or do food prices exhibit some
core-like properties, which are relevant for monetary
policy and cannot be ignored? Large relative price
changes triggered by adverse supply side factors
have been identified as cost-push shocks that shift
the Phillips curve upwards and to the right (Ball and
Mankiw, 1995). In the Indian context, relative food
price shocks triggered by monsoon failures have been
found to be significant in explaining Phillips curve
dynamics (Patra et al., 2014). Households’ inflation
expectations formation in India are considerably
influenced by food prices (Goyal and Parab, 2021).
Moreover, food prices do tend to co-move, but they
also exhibit considerable heterogeneity in their
underlying dynamics, with the nature of inflation
persistence differing across categories and type of
shocks – global or domestic. There is also evidence
of spillovers of persistently high food inflation to
underlying inflation (RBI, 2014; Anand et al. 2016;
Nadhanael, 2020; Patra et al., 2021b).
In this context, this article attempts to explore
answers to the questions posed to the conduct of
monetary policy by the food inflation behaviour in
India. Section II examines the stylised facts regarding
food inflation. Section III attempts a formal analysis
of the behaviour of food inflation persistence. Section
IV delves into spillovers of food prices to non-food
88
Are Food Prices the ‘True’ Core of India’s Inflation?
components. Section V probes whether demand or
cyclical factors impact food inflation and also brings it
all together to draw out monetary policy implications
of high and persistent food price inflation. Section VI
concludes.
II. Food and Non-food Inflation: Some Stylized Facts
By convention, a core measure of inflation is
constructed by minimising or excluding volatile
components of the CPI – typically food and energy
– to inform the setting of forward-looking monetary
policy with medium-term objectives, since the data
can measure developments only up to the recent
past. The goal is to eliminate transitory developments
and skews, and focus on the underlying longer-term
trends. The possibility that such a core measure will
be representative of overall inflation is based on two
premises. First, it is assumed that means of food and
non-food inflation are equal. If this is the case, then
bringing down non-food inflation will eventually
result in lower food inflation. Hence, monetary policy
makers can focus on the so-called core1 inflation while
responding to headline inflation in terms of which
the price stability target of monetary policy is defined.
Second, it is assumed that the volatility in food
inflation is higher than non-food inflation, bringing
in noise and weakening the signal on underlying
inflationary pressures. If, however, food inflation
shocks are large and persistent, they can affect non-
food inflation through second-round effects (Walsh,
2016).
Beginning with the equality of means assumption,
average food inflation in India for the period 2016-
20232 has remained close to the average of headline
and core inflation. Average inflation in each of the
food sub-groups has, however, been different and not
equal to the averages of headline and core inflation
(Chart 1.a). Certain sub-groups like oils and fats, spices
and meat and fish have, in fact, exhibited higher
1 i.e. CPI inflation excluding food and fuel.
2 Period under the flexible inflation targeting (FIT) regime.
RBI Bulletin January 2024
Are Food Prices the ‘True’ Core of India’s Inflation? ARTICLE

Chart 1.a: Average Inflation (2016-2023*) Chart 1.b: Average Annual Inflation

Note: Dotted line represents the average headline inflation; *: up to October 2023.
Source: Authors’ estimates.

average inflation during this period. In some years,
food inflation has remained lastingly higher than the
headline and core (Chart 1.b).
Food inflation volatility, measured by the
intertemporal standard deviation (SD), has been
markedly higher than the volatility of headline
and core inflation. Certain food sub-groups like
vegetables, oils and fats and pulses have recorded
high SDs, while certain sub-groups like prepared
meals and milk have shown lower variability relative
to other sub-groups in food (Chart 2.a). As in most
countries3, food inflation in India has been more
volatile than core inflation during all the years in the
past decade (Chart 2.b).

Chart 2.a: SD during (2016-2023*) Chart 2.b: Annual Volatility

Note: Dotted line represents SD in the headline inflation; *: up to October 2023.

Source: Authors’ estimates.

3 Walsh (2016).

RBI Bulletin January 2024 89

ARTICLE Are Food Prices the ‘True’ Core of India’s Inflation?

Chart 3.a: Contribution to Average Inflation Chart 3.b: Contribution to Inflation Variance

Note: CPI weights in brackets.

Source: Authors’ estimates.

Food inflation contributed 43 per cent of average prices of food have a considerable bearing on the
headline inflation between 2016 to 2023 (Chart 3.a). food inflation trajectory, impacting the distribution
In the total variance of headline inflation, vegetables of headline inflation. On the other hand, skewness
dominated all other sub-groups, contributing 38 per and SD of core inflation exhibit no correlation with
cent (Chart 3.b). The covariances among the sub-groups its mean (Table 1).
also contributed significantly to the total variance in
headline inflation at around 30 per cent. This signifies Table 1: Correlation Coefficient of CPI Inflation
the role of spillovers and second-round effects. Moments (Within Groups)
Mean Standard Skewness Kurtosis
The implications of large changes in relative Deviation
prices of food on headline inflation are evaluated
a. Headline
by the correlation and cross-correlation among
Mean 1.00
the moments4 of headline, food and core inflation SD 0.11 1.00
(Annex). Skewness 0.40* 0.27* 1.00
Kurtosis -0.22* 0.26* 0.23* 1.00
Average food inflation is positively correlated
b. Food
with its skewness, while it is uncorrelated with
Mean 1.00
its SD. This indicates that large changes in relative SD 0.15 1.00
Skewness 0.34* 0.31* 1.00
Kurtosis -0.14 0.14 0.30* 1.00
4 The four statistical moments are quantitative measures related to the
shape of a probability distribution. The first moment is the measure of c. Core
central tendency (average); the second moment represents variability Mean 1.00
(measured using SD); the third moment is a measure of asymmetry
SD 0.11 1.00
(skewness); and the fourth provides the information on peakedness
Skewness 0.08 0.09 1.00
(kurtosis).
Kurtosis -0.08 -0.26* 0.04 1.00
The calculations are carried out by using monthly CPI data from January
2012 to October 2023 at sub-group/group level due to issues in higher level Note: *: Denotes significance at 5 per cent level.
aggregation when using item level CPI data (Das, P. and George, A.T., 2023). Source: Authors’ estimates.

90 RBI Bulletin January 2024

Are Food Prices the ‘True’ Core of India’s Inflation? ARTICLE

High correlations among the averages of food, core from food to non-food inflation could be large if food
and headline inflation is indicative of the composition price shocks are persistent. To sum up large changes
of the CPI basket. The SD and skewness in headline in food prices have the potential to affect headline
inflation is having high positive correlation with those inflation lastingly.
of food inflation, signifying the role of food inflation
III. Persistence in Food inflation
in determining the variability and asymmetry of
headline inflation (Table 2). Persistence tends to vary over time and across
components. Hence, we estimate the time varying
Moreover, the cross-correlation between the
persistence5 in inflation6, its major groups and the
moments of food and headline inflation suggests that
sub-groups of food inflation.
the skewness in food inflation is positively correlated
with the mean and SD of headline inflation, implying First, we estimate persistence from monthly data
that large relative price changes in food inflation from October 2016 to October 2023 in
impacts the headline inflation path.
Thus, food inflation has exhibited intertemporal and . ...(1)
and cross-sectional variation. Inflation in certain food where is alternatively inflation in headline, core,
sub-groups has contributed excessively to the volatility food and different food sub-groups. Errors ( ) follow
in headline inflation. Furthermore, the analysis of normal distributions with stochastic volatility. is
moments points to spillovers, i.e., shocks transmitted the time varying inflation persistence.
A comparison of persistence in headline, core and
Table 2: Correlation Coefficient of CPI Inflation food inflation suggests that core inflation has been on
Moments (Between Groups) average more persistent than food inflation during
Headline Food Core October 2016 through October 2023 (Chart 4). The
a. Mean persistence in food inflation has shown considerable
Headline 1.00 variation across time.
Food 0.93* 1.00
Core 0.74* 0.47* 1.00
Certain sub-groups like prepared meals, non-
alcoholic beverages, milk, cereals, oils and fats, pulses
b. SD
and spices display higher degrees of persistence
Headline 1.00
Food 0.99* 1.00 than other sub-groups like vegetables, reflecting
Core 0.06 0.01 1.00 the influence of international developments and
c. Skewness structural domestic supply bottlenecks (Chart 5).
Headline 1.00
Food 0.95* 1.00
5 We have used the time varying parameter model with stochastic
Core -0.27* -0.26* 1.00
volatility for our estimation (Stock and Watson, 2007). For estimating the
d. Kurtosis time varying parameter regression, we used the TVP package (Nakajima,
2011). The time varying parameters and stochastic volatility are estimated
Headline 1.00
by using the Bayesian Markov Chain Monte Carlo (MCMC) method.
Food 0.93* 1.00
6 We use year-on-year inflation for estimating the persistence. A note
Core 0.25* 0.17* 1.00
of caution is that persistence tends to be higher for this measure of
Note: *: Denotes significance at 5 per cent level. inflation than annualised month-on-month rates as it represents average
Source: Authors’ estimates. annualised month-on-month changes over a 12-month period.

RBI Bulletin January 2024 91

ARTICLE
Chart 4: Time-varying Inflation Persistence
Source: Authors’ estimates.
The non-trivial degree of inflation persistence in
certain food sub-groups increases the risk of spillovers
to non-food inflation through inflation expectations
and cost-push pressures. Hence, monetary policy
will have to be on guard to avoid the unanchoring of
inflation expectation and generalisation of inflation.
Chart 5: Time-varying Inflation Persistence: Food Sub-groups
Source: Authors’ estimates.
92
Are Food Prices the ‘True’ Core of India’s Inflation?
IV. Food Inflation Spillovers
The significance of food inflation spillovers to
non-food inflation is tested in an auto regressive
distributed lag (ARDL) cointegration framework
(Pesaran et al., 2001) using seasonally adjusted
monthly data from January 2011 to October 2023.
The bounds test suggests a long run cointegration
between prices of food and non-food items (Table 3).
The error correction term is negative and statistically
significant for food inflation, while it is not significant
for non-food inflation. This indicates that food prices
undergo deviations from equilibrium after a shock but
they converge to non-food prices within a year. The
large residual volatility of food price changes (relative
to non-food) indicates that, in general, food price
shocks are transitory in nature. On the other hand,
a positive and statistically significant coefficient on
food price changes in the short-run equation for non-
food inflation indicates that spillovers happen from
food prices to non-food prices. The low magnitude of
this coefficient indicates that only large and persistent
food price shocks affect non-food prices. Nevertheless,
RBI Bulletin January 2024
Are Food Prices the ‘True’ Core of India’s Inflation? ARTICLE

Table 3: Food and Non-food Inflation Dynamics group. Errors ( ) follow a normal distribution with
stochastic volatility. The stochastic volatility in errors
ΔNon-food ΔFood
is introduced to control for time-varying supply-side
Cointegration Test (F-Statistic) 7.424** 5.050*
Error Correction Term 0.009 -0.080*** effects. represents the short-term elasticity of ith
ΣΔNon-Food 0.137* -0.136 food sub-group inflation with respect to the output
ΣΔFood 0.048** 0.231***
Residual SD$ 0.239 0.839 gap, while is the long-run elasticity.
Residual White Noise Test (p-value) 0.469 0.381

***, ** and * represent significance at 1 per cent, 5 per cent and 10 per We use to readjust the CPI weight of the
cent, respectively.
$
The SD corresponds to non-annualized m-o-m changes.
Note: Estimated using Sebastian Kripfganz and Daniel C. Schneider ARDL subgroup ( ). If is negative, a zero weight is
Module in STATA. assigned. Thus, the readjusted weight ( ) of each
Source: Authors’ estimates.
subgroup is

the significance of food price spillovers underscores

the importance of anchoring inflation expectations in
the wake of persistent and large food price shocks.
V. Cyclical Sensitivity of Food Inflation
Food prices are regarded as predominately driven
by supply factors – demand is assumed not to play
any meaningful role in the determination of these
prices. The cyclical sensitivities of sub-group level food
inflation and their contribution to overall food inflation
are estimated in a time varying regression framework
using quarterly data from Q1:2011 to Q3:2023 (Stock
and Watson, 2007, 2020; Patra et al., 2022, 2023).
First, we determine the time varying regression7
coefficients of each of the food sub-groups with a
measure of the economic cycle proxied by the output
gap8.
and . ...(3)
where is the seasonally adjusted quarter-on-
quarter annualised inflation rate of ith food sub-
7 We have used the time varying parameter model with stochastic
volatility for our estimation, based on the methodology by Stock and
Watson (2007). For estimating the time varying parameter regression, we
used TVP package by Nakajima (2011). The time varying parameters and
stochastic volatility are estimated by using the Bayesian Markov Chain
Monte Carlo (MCMC) method.
8 We use the output gap measure as in Patra et al. (2021a).
= 0, Otherwise ...(4)
is normalized to 100 to get the weights of the
sub-groups.
The long-run elasticities of the output gap on
different food inflation sub-groups indicate wide
intertemporal and cross-sectional variations (Chart 6).
While certain sub-groups like vegetables, oils and fats,
and spices do not show any cyclically sensitivity and
are fully driven by supply conditions and international
prices, other sub-groups reveal sensitivity to demand
conditions of varying intensity. We use this to
capture the contribution of demand conditions to
the evolution of food inflation over the last decade
(Chart 7).
About 90 per cent of food inflation is determined
by non-cyclical factors like the weather, supply
conditions, international prices and availability. On an
average, however, 10 per cent of food inflation is driven
by demand factors with significant time variation. This
warrants vigil – counterfactual experiments using the
RBI’s workhorse quarterly projection model (QPM)9
indicate the need to closely evaluate the sources and
nature of shocks to food prices in order to determine
9 For details see John et al. (2023).

RBI Bulletin January 2024 93

ARTICLE Are Food Prices the ‘True’ Core of India’s Inflation?

Chart 6: Time-varying Cyclical Sensitivity of Food Sub-groups

Source: Authors’ estimates.

the appropriate monetary policy response so as to
avoid generalisation.
Two types of shocks are experimented with: (i)
transitory shocks from vegetables prices; and (ii)
persistent shocks due to monsoon failures. Under (i),
inflation falls, allowing monetary policy to see through
the shock by not changing the policy rate (Chart 8).
On the other hand, if monetary policy misjudges the
shock and chooses to react to this transitory shock by
increasing the policy rate, it will induce volatility in
the output gap without having any noticeable impact
on the inflation path.

Chart 7: Contribution of Cyclically Sensitive Food Components to Food Inflation

Source: Authors’ estimates.

94 RBI Bulletin January 2024

Are Food Prices the ‘True’ Core of India’s Inflation? ARTICLE

Chart 8: Transitory Food Inflation Shocks

a. Inflation b. Policy Rate c. Output Gap

Note: Orange line repersents the Impluse Resposnse Functions (IRFs) with policy action and blue line repersents IRFs with no policy action.
Source: Adapted from Patra et al. (2021b).

A persistent food price shock warrants monetary VI. Conclusion

policy action to avoid unanchoring of inflation
expectations and second-round effects (Chart 9).
Per contra, if monetary policy chooses to neglect a
persistent food price shock, inflation expectations
become unanchored, leading to generalised inflation.
Armed with these empirical findings, we circle
back to the question we posed to ourselves at the
beginning of the paper: are food prices the ‘true’
core of India’s inflation? First of all, we scoured
the literature10 to determine the properties of core

Chart 9: Persistent Food Inflation Shocks

a. Inflation b. Policy Rate c. Output Gap

Note: Orange line repersents the IRFs with policy action and blue line repersents IRFs with no policy action.
Source: Adapted from Patra et al. (2021b).

10 Marques et al. (2003); Das et al. (2009); Raj and Misra (2011); Schembri (2017); Dholakia and Kadiyala (2018); Raj et al. (2020); Bańbura et al. (2023).

RBI Bulletin January 2024 95

ARTICLE
inflation, at least from a practitioner’s perspective. A
core measure should reflect the underlying trend of
overall inflation. The data-driven approach is to damp
or remove volatile and transitory elements in the
inflation formation process so as to maximise the signal
to noise ratio in visualising future headline inflation
– a defining requirement for policy formulation.
Second, core inflation displays persistence; hence
shocks to the core have long-lived effects on overall
inflation, warranting monetary policy responses.
Third, non-core inflation should converge to the core
and there are no spillovers from non-core inflation to
core. Fourth, the core measure is cyclically sensitive
and hence amenable to monetary policy actions and
stance.
How do our findings on food inflation dynamics in
India stack up against these core properties? First, on
an average, food inflation has ruled close to headline
inflation, satisfying the condition of equality of means.
On the other hand, food inflation has been markedly
more volatile than the headline, imparting more noise
than signal. It is important to note, however, that not
all food sub-groups contribute to this amplification
of the noise to signal ratio – the main culprit is
vegetable prices. Second, food inflation has exhibited
persistence in some years, but this is concentrated in
some sub-groups. Third, when food inflation shocks
have been large and persistent, they have spilled over
to prices in the non-food categories, although in the
long-run, food inflation tends to converge to non-
food inflation. Fourth, even though food inflation is
primarily driven by supply-side factors, the influence
of demand on several of its components is non-trivial
and time varying.
Reading all this together, there are times when
food inflation mimics core inflation. With its large
share in the consumption basket, food inflation has
the potential to affect headline inflation and it can
also affect non-food inflation in the event of large and
repeated food price shocks. Ascertaining the sources
96
Are Food Prices the ‘True’ Core of India’s Inflation?
and nature of these shocks is clearly the remit of risk-
minimising monetary policy as its goal of price stability
can easily be undermined by the de-anchoring of
inflation expectations and the broadening of inflation
pressures due to food price shocks. At the same time,
wielders of monetary policy need to be conscious of
the dangers of overkill in reactions to a transitory food
price shock and also of the pitfalls of benign neglect of
looking through persistent food price shocks.
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guide. VoxEU, March, 1, 2007.
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(2021b). Flexible inflation targeting (FIT) in India. In
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ARTICLE Are Food Prices the ‘True’ Core of India’s Inflation?

Annex
Table A1. Correlation among the various moments of Headline, Food and Core Inflation

Headline Food Core

Mean SD Skewness Kurtosis Mean SD Skewness Kurtosis Mean SD Skewness Kurtosis

Mean 1.00

SD 0.11 1.00
0.20
Headline

Skewness 0.40* 0.27* 1.00

0.00 0.00

Kurtosis -0.22* 0.26* 0.23* 1.00

0.01 0.00 0.01

Mean 0.93* 0.16 0.55* -0.14 1.00

0.00 0.06 0.00 0.10

SD 0.10 0.99* 0.27* 0.32* 0.15 1.00

0.25 0.00 0.00 0.00 0.08
Food

Skewness 0.21* 0.30* 0.95* 0.27* 0.34* 0.31* 1.00

0.01 0.00 0.00 0.00 0.00 0.00

Kurtosis -0.20* 0.08 0.26* 0.93* -0.14 0.14 0.30* 1.00

0.01 0.35 0.00 0.00 0.09 0.09 0.00

Mean 0.74* -0.06 -0.04 -0.32* 0.47* -0.07 -0.15 -0.28* 1.00
0.00 0.50 0.61 0.00 0.00 0.39 0.08 0.00

SD 0.11 0.06 0.18* -0.34* 0.08 0.01 0.24* -0.24 0.11 1.00
0.19 0.46 0.03 0.00 0.32 0.91 0.00 0.00 0.18
Core

Skewness -0.06 -0.10 -0.27* -0.28* -0.11 -0.11 -0.26* -0.28* 0.08 0.09 1.00
0.48 0.25 0.00 0.00 0.19 0.18 0.00 0.00 0.38 0.27

Kurtosis 0.16 0.09 0.30* 0.25* 0.25* 0.12 0.22* 0.17* -0.08 -0.26* 0.04 1.00
0.06 0.28 0.00 0.00 0.00 0.17 0.01 0.05 0.32 0.00 0.65

Note: * Denotes significance at 5 per cent level; p-values in italics.

Source: Authors’ estimates.

98 RBI Bulletin January 2024

Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns
Dynamics of Credit Growth in
the Retail Segment: Risk and
Stability Concerns
by Vijay Singh Shekhawat, Avdhesh Kumar
Shukla, ACV Subrahmanyam and
Jugnu Ansari^
This article analyses retail credit flows and asset quality
dynamics therein across the supervised entities on an
inter-temporal basis. The study finds that the quality
of retail loan portfolio continues to be healthy across the
banks, product categories and borrower risk classes, despite
a surge in growth. However, it also finds that a few sub-
categories in the unsecured retail sector show signs of
weakness, which need to be closely monitored by lenders.
The recent pre-emptive macroprudential measures by the
Reserve Bank augur well for the financial stability.
1. Introduction
The sectoral composition of bank credit has
undergone a decisive shift in the last decade. The
compositional change is primarily driven by the
growing prominence of personal loans or retail credit
in the overall bank credit.1 As of June 2023, personal
loans constituted the single largest category of bank
credit, accounting for 49 per cent of total borrower
accounts, and 30 per cent of the outstanding non-food
credit.2 In the recent past, the share of personal loans
in the total non-food credit has increased steadily.
Between 2015 to 2023, the personal loans registered a
compounded annual growth rate (CAGR) of 17 per cent
^
The authors are with the Department of Supervision, Reserve Bank of
India. The views expressed are those of the authors and do not reflect
or represent that of the Reserve Bank. The authors express their sincere
gratitude to Shri Swaminathan J, Deputy Governor and Shri Rohit Jain,
Executive Director for their guidance and encouragement. Data support
from Shri Rohit Shivaji Narvane is gratefully acknowledged.
1 Personal or retail loans are used interchangeably in this study, and they
refer to loans given to individuals for housing, loans against property,
purchase of vehicles, consumer durables, loans against gold jewellery,
personal loans, educational loans, credit cards, etc.
2 Sourced from the table no. 3 & 4 -size of credit limit-wise classification
of outstanding credit of scheduled commercial banks according to
occupation, Basic Statistical Returns (Quarterly Credit data) – June 2023.
RBI Bulletin January 2024
ARTICLE
in outstanding amount and 15 per cent in borrower
accounts. Against which, non-food credit registered a
CAGR of 10 per cent in outstanding amount and 12
per cent in borrower accounts. Tracking the above rise
in the share of retail credit, concerns have been raised
over the increasing indebtedness of households
and the potential risks to the lending entities from
increasing their exposures to the retail segments
(Roy, 2023; Das, 20243). The literature has further
expressed concerns that a rise in households’
indebtedness may expand contemporary consumption
at the cost of sustainable growth in the medium to
long term (Gupta, 2023).
Several studies have analysed the growth in
retail credit in the Indian context. It is observed that
personal loans have aided in keeping up the growth
momentum in the overall credit (Kumar and Senapati,
2023). Also, the retail credit growth is sensitive to both
asset quality and interest rates (ibid). However, it is
also observed that only a few banks are dominating the
credit flow to the personal loan segment, reflecting the
differences in the business models adopted by various
banks (Senapati and Prakash, 2021). Consequently,
the share of personal loans within the credit portfolio
of banks has increased in an unequal manner across
banks. Furthermore, from financial stability and risk
management standpoint, a sustained increase in
credit flows to any sector should be backed by strong
fundamental growth drivers without any build-up of
concentration risks (Roy, 2006).
However, the sustained increase in credit flow to
personal loans, particularly unsecured loans, and the
consequent rise in their share in overall credit could
also entail financial risk and stability concerns both at
the entity and systemic levels. Therefore, it needs to
be ascertained whether the growth witnessed in the
personal loan segment is being driven by fundamental
factors without leading to overheating (i.e., excessive
credit supply) (Lombardi et al., 2017). Also, at the
entity level, the rise in the share of personal loans
3 https://www.businesstoday.in/magazine/money-today/story/the-retail-
lending-burden-behind-the-surge-in-unsecured-loans-402267-2023-10-17
99
ARTICLE
in banks’ credit portfolios should be accompanied by
strong risk management practices regarding borrower
selection, and diversification across size and risk
categories to avoid the build-up of concentration risks
(RBI, 2022; Patra, 2023; RBI, 2023). In this context, the
present study analyses the dynamics of retail credit
with reference to growth and asset quality trends.
The study contributes to the existing literature by
specifically analysing whether the current phase
of growth in retail credit and its sub-segments is
sustainable and whether there are any build-up of
risks.4
To ascertain the above, the study analyses a host of
forward-looking, sector specific, time series variables.
The problem of sustainability of the current surge in
retail credit flows hinges on the health of two broad
sectors of the economy, viz., households and financial
service providers, i.e., banks and non-bank financial
corporations. However, households technically are a
residual sector, and unlike the general government
and non-financial corporate sector, it does not have
sector-specific aggregated indicators. Therefore, the
health of households and the financial services sector
is assessed using financial vulnerability indicators,
viz., gross, and incremental delinquencies at the
sectoral and product levels.
In order to address these issues, this article
uses data from multiple sources, viz., RBI’s sectoral
deployment of credit releases, aggregated information
accessed through supervisory returns submitted to
the RBI, and aggregated information received from a
credit information company.5 The study uses longest
possible historical information of sectoral credit flows
(March 1999 to March 2023). However, the central
question of the study is focused on the sustainability
4 Retail or personal credit in this study refers to personal loans as
indicated in the sectoral deployment of bank credit data published by the
Reserve Bank (refer foot note 1). A distinction is drawn to the reference of
regulatory retail which is used for purposes of capital computation under
Basel guidelines. While functionally these classifications may have some
overlap, the distinction is retained for analytical clarity.
5 TransUnion CIBIL.
100
Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns
of current credit flows, especially during periods of
stress and therefore, it has analysed the latest credit
information with Covid-19 pandemic as a key natural
experiment. Specifically, the study uses a before-after
framework to assess the build-up of stress in the
banking system and households.
The study is divided into five sections. Following
the introduction, the second section presents a
chronological overview of the retail credit growth
and its composition (secured vs unsecured loans)6 to
examine whether the sustained growth in the retail
credit segment is a long-term phenomenon. The third
section provides a multi-dimensional analysis of
the trends in retail credit composition in banks and
non-banking financial companies. The fourth section
makes a comprehensive assessment of the risk and
stability concerns in the retail credit segments. The
concluding observations are outlined in the fifth
section.
2. Evolution of Retail Credit in India – Long-term
Trend
Before setting a context for the analysis of the
sustainability of retail loans and the build-up of stress
therein, a trend analysis of the growth of personal
loans vis-à-vis overall bank credit is provided. The
average growth of bank credit loans from March 1999
to March 2023 was 16.5 per cent, at the same time
personal loans grew by 21.4 per cent (Table 1). During
the sample period, housing loans grew the fastest
(24.7 per cent). Based on the long-term trend of overall
credit growth and shift in credit growth trajectory, the
entire period is divided into two parts, i.e., 1999-2011
and 2011-2023. In the first phase, the average bank
credit growth at 21.5 was around twice as large as
the 11.0 per cent growth in the second phase. At the
same time, retail credit outpaced overall credit growth
during both phases growing at 26.4 per cent and 16.1
per cent, respectively in the first and second phase.
6 Secured retail loans refer to retail assets which are backed by collateral
or hypothecation.
RBI Bulletin January 2024
Dynamics of Credit Growth in the Retail Segment: ARTICLE
Risk and Stability Concerns

Table 1: Descriptive Statistics of Growth in Bank Table 2: Drivers of Incremental Credit Growth
Credit and Personal Loans (In per cent)
(In per cent) Period Contribution Contribution Contribution of
Variables Bank Personal Consumer Housing Other of personal of housing non-housing-
credit loans durables loans personal loans to loans to personal loans
loans bank credit personal loans in personal
growth growth loans growth
Full period: March 1999 - March 2023
Full: 1999 - 2023 28.6 49.5 50.5
Mean 16.5 21.4 16.6 24.7 19.9 Phase 1: 1999 - 2011 17.0 52.9 47.1
Minimum 5.3 1.0 -30.4 7.6 -5.6
Phase 2: 2011 - 2023 32.9 48.8 51.2
Maximum 31.4 57.2 63.2 73.9 45.2
Standard deviation 7.1 11.8 25.8 16.4 10.7 Source: Authors estimates using DBIE data.
Coefficient of 0.4 0.5 1.6 0.7 0.5
variation In the full period, housing loans had the
Phase 1: March 1999 - March 2011 dominant share in the growth of the retail credit,
Mean 21.5 26.4 16.0 33.0 22.8 however, in the second phase, non-housing retail
Minimum 15.2 1.0 -25.7 7.6 -5.6
Maximum 31.4 57.2 51.1 73.9 45.2
credit has emerged as the major growth contributor
Standard deviation 5.5 14.5 25.1 19.0 12.9 (Table 2). Interestingly, it can be observed that
Coefficient of 0.3 0.5 1.6 0.6 0.6
variation
volatility in retail credit growth (as measured by
Phase 2: March 2011 - March 2023
standard deviation and coefficient of variation) has
declined indicating a stable credit flow to the sector
Mean 11.0 16.1 17.3 15.7 16.7
Minimum 5.3 11.9 -30.4 9.5 3.8 and its sub-segments, though overall bank credit
Maximum 17.9 19.6 63.2 22.7 24.0 growth exhibited a marginal rise in volatility.
Standard deviation 4.0 2.4 26.6 3.6 6.2
Coefficient of 0.4 0.1 1.5 0.2 0.4 Generally, the growth in the retail credit has
variation
outpaced that of overall bank credit, barring an
Source: Authors’ estimates using the Handbook Statistics on the Indian
Economy, DBIE,CEIC data. interim between 2007 to 2011 (Chart 1a).7 Also, if the

Chart 1: Historical Movement of Growth and Share of Retail Credit

a. Difference in YoY Growth in Retail and Bank Credit b. Share of Retail Credit in Bank Credit (In per cent)
(In per cent)

Note: The growth in retail credit segment over and above the growth in bank credit is depicted (difference = retail credit growth – bank credit growth).
Source: Handbook of the India Economy - Reserve Bank of India, CEIC, and staff calculations.

7 During 2007 to 2013 the growth in bank credit was primarily driven by industrial credit and more specifically infrastructure credit. Incidentally, trend
analysis using the HP filter also endorses 2007 and 2013 as structural break years.

RBI Bulletin January 2024 101

ARTICLE Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns

extreme values are not considered the growth in the
retail segment was mostly higher than the growth in
bank credit. Prima facie, it indicates that the current
rise in retail credit (post-2014) is more likely than not,
in consonance with the long-term trends (Anthony,
Shankar, & Sahoo, 2019). The general rise in income
levels, purchasing power, demographic profile, and
improvement in the quality of the credit information
(credit scores) has helped in sustaining the growth
momentum in retail credit (Gopinath, 2005; Bag,
2012; Sengupta and Vardhan, 2021) (Chart 1b).
The composition of retail credit has also been
changing over time. The share of unsecured credit
within the retail credit has been rising. Between
2007 to 2023, the share of unsecured advances in
retail credit increased from 25 to 35 per cent (Chart
2a).8 As opposed to this, the share of major segments
representing the secured credit remained stable. The
housing loans continue to be the single largest sub-
segment, constituting around 48 to 50 per cent of
retail credit, the vehicle loans constituted the second
largest segment accounting for about 10 to 12 per
cent share. Further, both the secured and unsecured
components have registered growth rates higher than
overall bank credit growth (Chart 2b).
Besides, the above drivers of retail credit, the
continued focus of banks in the retail segment may
also be due to historically low delinquency and
slippage rates and hence better credit quality observed
in this segment vis-à-vis other credit segments
(Chart 3) 9.
The above trends in retail credit growth, low
levels of delinquency, composition of secured and
unsecured loans indicate that the emergence of
retail credit’s dominance in overall credit growth is
in consonance with its long-term trends. However,
it needs to be ascertained whether the credit flow
is towards appropriate borrowers without causing
any risk build up. The risks can still stem from
the concentration and distribution of credit among

Chart 2: Movement in Share of Unsecured Credit and Growth in Retail Credit

a. Unsecured Loans Share in Retail Credit b. Growth of Retail and Bank Credit

Notes: Refer foot note 7.

Source: The Database on the Indian Economy, CEIC, Reserve Bank of India, and staff calculations.

8 The retail credit sub-segments like personal loans, credit card outstanding, other personal loans, educational loans are considered to represent the
unsecured advances. Although, educational loans up to certain size are covered by credit guarantee scheme, they are treated as unsecured lending
considering the non-availability of hypothecated assets as in case of secured advances.
9 The comparison is done from March 2015 considering the consistent availability of supervisory data.

102 RBI Bulletin January 2024

Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns
Chart 3: Scheduled Commercial Banks’ Movement in Gross
Non-performing assets Ratio and Slippage Ratio
a. Gross Non-Performing Assets Ratio
(In per cent)
Notes: GNP ratio and slippage ratio indicate the stock and rate of accretion of non-performing assets, respectively.
Source: Supervisory Returns, Reserve Bank of India.
different types of borrower risk categories.10 Hence,
in the next section, the nature of retail credit growth
and its distribution across entities, products and
borrower risk categories is examined to ascertain the
concentration of risks.
3. Dimensions of Credit Flow
3.1 Do the Right Borrowers Get the Credit?
The prominent feature of retail credit portfolio is
that it carries an overall lower probability of default
owing to its diversification across borrower and product
categories. The granularity of the credit distribution
brings in diversification benefits imparting stability
to the overall portfolio (Patra, 2023).11 During 2014 to
2023, the distribution of retail credit, both in terms
of amount outstanding and number of accounts,
across various size buckets have remained more
or less stable, although the mid-size buckets (viz.,
10
The aggregate measures e.g., credit to GDP may not capture the
distributional trends at the micro level, which may indicate concentration
risks both at the product and entity levels.
11 Though the article does not discuss regulatory retail, it may be pertinent
to mention the qualifying criterion for lower risk weights for regulatory
retail is on account of granularity and diversification.
RBI Bulletin January 2024
ARTICLE
b. Slippage Ratio
(In per cent)
`25 lakh to up to ` 1 crore) have seen stronger growth.
Further, as compared to other components of bank
credit (excluding agriculture and personal loans),
the distribution of retail credit is relatively more
granular and distributed in low and mid-value buckets
(Chart 4).
Therefore, the growth in retail credit has not led
to any shift in the inherent composition of the retail
credit portfolio. However, at the product level, there
has been a shift in the composition albeit the changes
are not substantial. There has been a moderation in
the share of housing loans within overall retail credit,
indicating that other product categories are gaining
more traction, viz., consumer durables, credit cards
and other unsecured loans (Chart 5).
Mirroring the trends at the aggregate level, the
distribution of credit across size buckets has also been
stable across major retail product categories except for
other personal loans and consumer durables. In major
retail products, like housing loans, vehicle loans, and
credit cards, the contribution from medium-sized
buckets is increasing. Further, the change has been
non-disruptive as the compositional change indicates
103
ARTICLE Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns

Chart 4: Size Bucket Wise Distribution of Credit and Number of Borrower Accounts12
a. Retail Credit – Outstanding Amount b. Bank Credit (Excluding. Agriculture + Retail Credit) –
Amount Outstanding

c. Retail Credit – Number of Accounts d. Bank Credit (Excluding. Agriculture + Retail Credit) –
Number of Accounts

Notes: The original 13 Size buckets are rationalized into 6 buckets for brevity.
Source: Basic Statistical Returns, quarterly data on size and occupation wise distribution of credit.

a gradual shift across size buckets. Notwithstanding loans), 80 per cent of the credit is contributed to by size
the above, across product categories (barring housing buckets less than ` 10 to 25 lakh, thus reflecting the

Chart 5: Product wise Distribution of Retail Credit

a. Distribution of Outstanding Credit b. Distribution of Number of Borrowers

Source: Basic Statistical Returns, quarterly data on size and occupation wise distribution of credit.

12 Quarterly BSR series are available from March 2014.

104 RBI Bulletin January 2024

Dynamics of Credit Growth in the Retail Segment: ARTICLE
Risk and Stability Concerns

Chart 6: Product and Size Wise Cumulative Distribution of Share in Outstanding Credit
a. Housing Loans b. Consumer Durables

c. Vehicle Loans d. Educational Loans

e. Credit Cards f. Others

Notes: Vertical line indicates the cumulative share of 80 per cent in outstanding credit.
Source: Basic Statistical Returns, quarterly data on size and occupation wise distribution of credit.

granular13 nature of retail credit even at the product
level (Chart 6).
13 As per the Basel III master circular of the Reserve Bank, qualifying
criterion for regulatory retail are orientation, product, granularity, and low
value of the individual exposures (https://rbidocs.rbi.org.in/rdocs/content/
pdfs/31MC12052023_A.pdf).
3.2 Retail Credit - Is There Concentration among a
Few Dominant Bank Groups
The aggregated borrower-level analysis reveals
that the retail loans portfolio across the product
categories continues to be granular and over the
years no adverse concentration build-up is observed.

RBI Bulletin January 2024 105

ARTICLE Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns

Chart 7: Bank-level Drivers of Credit Growth

a. Share in Incremental Growth – Cumulative Percentage b. Share in Retail Loans – Cumulative Percentage

Source: Supervisory returns and staff calculations.

Therefore, the credit concentration amongst the

Table 3: Movement in Hirschman and
financial service providers is assessed. The analysis
Herfindahl Index for Retail Credit
of retail credit growth amongst banks reveals that a
few banks are contributing to the major share in retail Financial Year Share in Share in
Incremental Outstanding
credit growth. Between 2017 and 2023, on average 60 Credit Credit
per cent of the incremental credit is contributed by
2016-17 1399 1324
five banks. However, in recent years, the incremental
2017-18 1110 1268
growth contribution from the dominant banks has
2018-19 1282 1255
decreased (Chart 7).
2019-20 1563 1262
The values of HHI (Hirschman and Herfindahl 2020-21 1936 1311
index) computed on share in incremental growth have 2021-22 1789 1353
fallen from 1400 in March 2017 to 1000 in March 2023, 2022-23 1007 1248

indicating the wider contribution by a broader set of Notes: Share in outstanding credit as on 31st March of the financial year.
banks (Table 3). Despite the increasing contribution by Source: Supervisory returns.

other banks to incremental growth in retail credit, the

HHI computed for share in outstanding retail credit
has moved moderately from 1350 in March 2017 to
1250 by March 2023.
3.3 Product category-wise and risk group-wise
movement of credit
Risk-score and retail product-wise movement of
outstanding credit flows reveal that there is stability
in the ticket size of credit disbursed. Further, per
live borrower, the average size of credit is higher for
highly rated borrowers except in the case of credit
cards (Chart 8). In the case of credit cards, per live
borrower credit outstanding is higher for the below-
prime borrowers suggesting a higher flow of credit to
relatively riskier borrowers.

106 RBI Bulletin January 2024

Dynamics of Credit Growth in the Retail Segment: ARTICLE
Risk and Stability Concerns

Chart 8: Product and Risk Tier Wise Movement in Distribution of Average Ticket Size
a. Housing Loans b. Auto Loans

c. Two Wheeler Loan d. Consumer Loan

e. Personal Loans f. Credit Cards

Notes: 1. Risk Tiers in decreasing order of riskiness Subprime, Near Prime, Prime, Prime Plus, and Super Prime.
2. Average ticket size is computed as outstanding balance divided by number of live borrowers in the risk tier.
Source: TransUnion CIBIL and staff calculations.

4. Movements in the Flow of Retail Credit and Stress
in Retail Credit Portfolio in the Post-Pandemic Period
The COVID-19 pandemic disrupted production
activity severely impacting the cash flows of bank
borrowers, particularly the small ticket borrowers.
To alleviate Covid-19 related stress, central banks,
including the Reserve Bank, instituted supportive
measures for the borrowers (RBI, 2023). However, as
noted earlier (Chart 1 & Table 1), the surge in retail
credit has continued even after the cessation of the

RBI Bulletin January 2024 107

ARTICLE Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns

Covid-19 related supportive policies. Therefore,

Table 4: Shift in Growth and Risk Composition of
concerns were raised that the unwinding of support Retail Portfolio#
policies may result in hidden fragilities surfacing with Pre-Covid-19 Post-Covid-19 Statistical
time lags in terms of defaults from restructured assets (March 2015 (December Significance
- December 2021 – June with sign
or assets coming out of the moratorium (RBI, 2023). 2019) 2023)

As alluded previously, the structure and Credit Growth

composition of the retail credit has not undergone Retail 14.80 20.00 (+)**
any systemic shift in the recent past. Further, the asset Housing 17.02 10.38 (-)***
Consumer Durables 24.05 45.23 (+)
quality parameters have shown an improvement or Credit Card 28.78 24.99 (-)
followed a stable trajectory. Therefore, it is expected Vehicle Loans 12.18 23.87 (+)*
that pandemic related stress, if any would have not Educational Loans 5.48 11.68 (+)***
Retail Others 9.89 37.05 (+)**
materially impacted the credit growth and asset
GNPA Ratio
quality trends in retail credit segments. The same is
examined empirically using a simple t-test framework Retail 2.00 1.78 (-)***
Housing 1.42 1.55 (+)*
for equality of means. The test examines, if there Consumer Durables 4.56 1.86 (-)
is a difference in the average values of the growth Credit Card 1.52 1.96 (+)***
and asset quality parameters in the periods before Vehicle Loans 1.97 1.64 (-)***
Educational Loans 7.80 6.35 (-)***
pandemic and post pandemic. Besides credit growth Retail Others 2.72 1.91 (-)***
and gross non-performing asset ratio (GNPA), the test
GNPA+TWO Ratio
is also carried out on GNPA including the technical
Retail 4.22 4.39 (+)*
write offs14 and slippage ratios.15 Housing 1.78 2.05 (+)***
Consumer Durables 36.30 19.73 (-)***
Accordingly, the status of credit flows and stress
Credit Card 11.63 13.28 (+)
in the retail portfolio (both incipient and realised) Vehicle Loans 3.81 4.16 (+)***
after COVID-19 in comparison with those before the Educational Loans 11.89 13.18 (+)*
Retail Others 6.48 5.34 (-)**
COVID-19 outbreak is presented (Table 4). It can be
Slippage Ratio
observed that the majority of credit products recorded
a statistically significant rise in credit growth in the Retail 2.37 2.11 (-)*
Housing 1.51 1.15 (-)**
post-COVID-19 period vis-à-vis the pre-COVID-19 Consumer Durables 3.90 5.02 (+)
period. Contrary to the credit growth, stress levels, as Credit Card 3.47 7.12 (+)***
depicted by GNPA ratios, and slippage ratios, in retail Vehicle Loans 2.48 2.92 (+)**
Educational Loans 7.75 3.78 (-)***
portfolios dipped during the post-COVID-19 period. Retail Others 3.68 2.51 (-)**
However, credit cards and vehicle loan portfolios did
Note: 1. TWO: Technical Write-Off.
record a moderate but statistically significant rise in 2. #: The period March 2020 to September 2021 has been considered
as the peak covid-19 affected period.
stress.

14 The technical write-offs represent the amount of non-performing

assets, which are outstanding in the books of the branches (or outstanding
at borrowers’ loan account level in centralised operations unit) but have
been written-off (fully or partially) at Head Office level.
15 The ratio of increase in NPAs during the year with respect to standard
advances at the beginning of the year. i.e., Fresh accretion of NPAs during
the year /Total standard assets at the beginning of the year multiplied
by 100.
5. Conclusion
The Indian economy is witnessing a surge in
retail credit growth. The credit growth is led by a
well-diversified customer base, with reasonably good
financial health conditions barring a few pockets of

108 RBI Bulletin January 2024

Dynamics of Credit Growth in the Retail Segment:
Risk and Stability Concerns
incipient weakness. Therefore, the recent trends as
depicted in the study underscore that it is imperative
for banks and other financial service providers to
monitor the retail segment closely and continuously
for any undue build-up of stress (Das, 2023).
Notwithstanding the above trends, the
policymakers may also consider using structural
prudential tools, viz., debt-service ratio and debt-to-
income ratio of retail borrowers. While the extant
macro prudential tools impart lender resilience by
specifying differential risk weights for various classes
of retail products reflecting their inherent riskiness,16
policy makers are encouraging lenders to use emerging
technology ecosystem, viz., account aggregators, to
seek requisite consent from the borrowers; strengthen
credit underwriting; and strengthen monitoring
of models (Swaminathan, 2023). Besides enabling
greater flexibility both in terms of product and pricing
choices for the borrowers, such frameworks facilitate
monitoring of borrower leverage in a holistic fashion.
This can be further extended by prescribing debt-to-
income (DTI) limits for certain borrower or product
categories. DTI limits along with restrictions on loan-
to-value (LTV) ratios are found to be effective macro
prudential tools, that can be synchronized to contain
systemic risks (Lee, Asuncion, & Kim, 2015; Shin,
2011). Also, such macro prudential tools can be quickly
calibrated in line with the evolving macro-economic
situations to support or dampen the credit growth.
References
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February). “Sectoral deployment of bank credit in
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Bag, D. (2012), “Growth of Retail Credit and Its
composition in Indian banking: A Macro Evaluation”,
International Journal of Computing and Corporate
Research, 2(3).
16
For example, under the extant prudential guidelines, the credit cards
and personal loans carry higher risk weights than housing loans.
RBI Bulletin January 2024
ARTICLE
BIS (2016). “Macroprudential policies and integrated
inflation targeting”. BIS Paper, (86a).
Brady, R. R. (2008). “Structural breaks and consumer
credit: Is consumption smoothing finally a reality?”,
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Das, S. (2023), “Winning in Uncertain Times: The
Indian Experience”, RBI, November. https://rbi.org.in/
Scripts/BS_SpeechesView.aspx?Id=1396
Das, S, (2024), “Governor’s interaction during Mint
BFSI Summit & Awards 2024 on January 11, 2024
(Edited Excerpts)”, RBI, January. https://rbi.org.in/
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consumption smoothing”. Journal of Money, Credit
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challenge. Retrieved from The Indian Express: https://
indianexpress.com/article/opinion/columns/the-
household-debt-challenge-9006522/
Kumar, P., Senapati, M., and Prakash, A. (2021), “Changes
in Sectoral Bank Credit Allocation: Developments
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Kumar, S., & Senapati, M. (2023). “Retail Credit
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of Macroprudential Policies in Developing Asia:
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Lombardi M. J., Mohanty M and I. Shim, (2017), “The
Real Effects of Household Debt in the Short and Long
Run”, BIS Working Papers No. 607.
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exuberance to resilience”. RBI Bulletin, LXXVII(10),
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RBI Bulletin January 2024
Stock-Bond Correlation and the Macroeconomy:
Evidence from India
Stock-Bond Correlation and the
Macroeconomy: Evidence from
India*
by Amit Pawar^, Mayank Gupta^,
Palak Godara^ and Subrat Kumar Seet^
This study examines the time-varying stock-bond
correlation under different inflation and output regimes
in India from April 2004 to August 2023. Spells of
negative stock-bond correlation are found to be ephemeral
in India compared to episodes of positive correlation,
suggesting low portfolio diversification benefits between
bonds and equities. However, bonds can act as a useful
vehicle for reducing equity portfolio volatility. Episodes of
risk aversion in financial markets may lead to switching
of correlation from a positive to negative sign amid flight
to safety. Results indicate that when inflation is moderate,
and the economy is growing, investors are more likely to
buy both stocks and bonds resulting in a positive stock
bond correlation.
Introduction
Stocks and bonds are two asset classes that are
ubiquitous to most portfolios, from large institutional
portfolios to small individual centric retail portfolios.
While stocks have historically outperformed bonds,
they have experienced higher volatility. Therefore, a
rational risk-averse investor might be concerned about
“expected risk adjusted returns” rather than only
expected returns. This explains investor preference
for portfolio diversification across asset classes
especially between stocks and bonds.
The co-movement between equity and bond
market returns has sometimes been used as a market
^The authors are from the Department of Economic and Policy Research.
The authors thank Satyam Kumar for his insightful comments. The views
expressed in this article are those of the authors and do not represent the
views of the Reserve Bank of India.
RBI Bulletin January 2024
ARTICLE
timing indicator to switch between equities and bonds
by investors, analysts, and financial commentators1.
During periods characterised by broad-based
optimism, the purchases of equities outweigh bonds,
and the prices of both the assets usually move in the
same direction leading to a positive correlation (albeit
low). The periods of negative correlation between the
returns of the two assets can arise due to an increase
in investor risk perception during periods of flight to
safety when investors perceive heightened risk and
rebalance their portfolios in favour of bonds which
in turn creates a divergence between the returns of
both the assets. Recent research has shown a time-
varying and sign switching character of stock-bond
correlation (Li et al., 2020; Brixton et al., 2023). One
of the plausible reasons for this characteristic is the
increased global financial integration in the last two
decades. The asset markets, in many countries, co-
move more strongly with the dominant asset markets
(like the US stock and bond markets). This may have
reduced the benefits of cross-country diversification
and investors, thereby, need to reallocate their
resources more frequently, inducing a random walk
in the stock-bond return correlation (Baur, 2010). In
a dynamic environment, it is desirable for investors
to continuously assess the market information and
adjust their portfolio. Thus, from a dynamic asset
allocation perspective, correlation between stocks and
bonds becomes important.
Even though shifts in stock bond correlation
driven by macro-factors is more important for
individual portfolio allocators, the central bank too
can, in principle, derive insights from the changing
stock-bond correlation. For instance, Pericoli (2018)
suggests “although central banks do not have specific
price targets for bonds or stocks, they are increasingly
1 Another plausible way to look at the relationship between equity and
bond markets is to compare forward earnings yield of the stock market
(E/P) with the 10-year G-sec yield (Y). This relationship has been christened
as “Fed Model” and is given by the following equation: (E/P) = Y.
111
ARTICLE
using the information contained in the prices of
these assets to gauge market participants’ growth
and inflation expectations. Hence, stock/bond return
correlation estimates may offer policymakers useful
complementary information to determine whether
markets are changing their views on inflation or
economic activity prospects.”
Empirical work on studying the stock bond
correlation has focused on exploring the various
economic factors driving the dynamic stock-bond
correlation and has identified real interest rates,
economic growth rate, inflation, and dividend
growth as macroeconomic variables influencing
the relationship (Pericoli, 2018). Uncertainty about
expected inflation and growth, risk aversion, and
market liquidity also emerged as potential factors
influencing the trends in stock-bond correlation
(Baele et al., 2010; Bekaert and Engstrom, 2010).
A study by Hasseltoft and Burkhardt (2012) on the
US market (1965-2011) suggests that the impact of
inflation uncertainty on stock-bond correlation
largely depends on the joint dynamics of growth and
inflation. The study finds the shift in the cyclical
relationship of inflation with respect to output
from countercyclical to procyclical or vice versa as
a plausible explanation for change in the sign of
stock bond correlation. For India, a countercyclical
relationship between inflation and output (Apergis,
1996; Gupta, 2019)2 may point towards a prevalence
of positive stock bond correlation.
In case of India, using daily returns on BSE Sensex
and CCIL broad bond index from April 2004 to August
2023, it is found that a portfolio having allocation to
both stocks and bonds (such as 60 per cent stocks
and 40 per cent bonds / 50 per cent stocks and 50
2 We test whether the relationship continues to be countercyclical for the
recent period. We find a statistically significant contemporaneous negative
correlation between inflation cycle and output gap. The plot is shown in
the Chart A1 of the Annex.
112
Stock-Bond Correlation and the Macroeconomy:
Evidence from India
per cent bonds) exhibits better returns than bonds-
only portfolios while exhibiting lower drawdowns3
compared to a stocks-only portfolio (Chart 1). During
the Global Financial Crisis (GFC) and Covid-19 period,
returns on BSE Sensex exhibited declines of around
60 per cent and 38 per cent respectively, which were
steeper compared to a portfolio consisting of both
stocks and bonds in a 60/40 and 50/50 split.
Stock-bond correlation plays an important role
in portfolio performance. A negative stock-bond
correlation implies that stocks and bonds act as natural
hedge to each other resulting in higher risk adjusted
returns. A positive stock-bond correlation may not
provide any hedging benefits and hence give lower
risk adjusted returns. The valuation of the portfolio
is likely to decrease because investors would require a
higher forward expected return to offset the increased
cross-asset risk they would be assuming. Simulations
confirm that negative stock-bond correlation
increases the Sharpe ratio, or the risk adjusted returns
for a portfolio consisting of stocks and bonds while
reducing the level of volatility. For instance, starting
with a 60/40 portfolio and assuming a stock-bond
correlation of (-) 0.3, the Sharpe ratio is 1.17 while the
portfolio volatility is 7 per cent. However, if the stock-
bond correlation was to rise to 0.3, the Sharpe ratio
falls to 0.97 while portfolio volatility climbs to 8 per
cent (Chart 2).
The empirical evidence on the association of
stock-bond correlation with the macroeconomic
regimes is relatively scarce in emerging markets.
Accordingly, this study endeavours to add evidence
from the Indian market to the existing empirical
literature on the role of macroeconomic regimes in
3 Drawdown is calculated by taking the difference between the peak
value (the highest point before a decline) and the trough value (the
lowest point during the decline), and then expressing that difference as a
percentage of the peak value.
RBI Bulletin January 2024
Stock-Bond Correlation and the Macroeconomy: ARTICLE
Evidence from India

Chart 1: Historical Performance of Stocks and Bonds

a. Cumulative Returns
Covid-19

GFC

b. Drawdowns

Note: i) Drawdown refers to how much a portfolio is down from the peak before it recovers back to the peak.
ii) For our analysis, an assumption of 60/40 split and 50/50 split between stocks and bonds is used. These are used only as representative allocations, and should
not be construed as optimal combination of stocks and bonds for an investor. Both the 60/40 and 50/50 portfolios assume daily rebalancing.
iii) We use total return series for Sensex and CCIL Broad Bond index.
Source: Bloomberg; and Authors’ calculations.

influencing the dynamics of stock-bond correlations. growth regimes are associated with positive stock-
Results indicate that moderate inflation and high bond correlation. The rest of the paper is structured

Chart 2: Stock-Bond Portfolio Performance

a. Sharpe ratio b. Volatility

Note: i) Portfolio performance is based on 1,00,000 simulated monthly returns with monthly rebalancing. Stock and bond returns are assumed to be jointly normal,
with annualised expected returns of 10 per cent per year and 5 per cent per year, and annualised volatilities of 12 per cent and 6 per cent, respectively.
ii) Sharpe ratio scales expected excess returns on a portfolio by inverse of its volatility, and gives a measure of risk adjusted returns.
iii) Legend shows different levels of stock-bond correlations.
Source: Authors’ calculations.

RBI Bulletin January 2024 113

ARTICLE
as follows. Section II presents a literature survey of
research studies in this area. Section III discusses the
data and the models followed by Section IV which
analyses the key findings. Finally, section V concludes
the study.
II. Survey of Literature
Initial studies investigating the stock-bond return
correlation asserted that the relationship is time
invariant and positive over time. The work of Shiller
and Beltratti (1992), Campbell and Ammer (1993) and
Fleming et al., (1998) are among the seminal work that
investigated the relationship between the two asset
classes. The positive correlation was attributed to the
presence of a common discount factor (Shiller and
Beltratti, 1992; Campbell and Ammer, 1993). However,
it has been argued that this model is oversimplified in
terms of the constraining assumption of a common
discount factor and ignores the differences in
associated relative risk of the two asset classes (Chiang
et al., 2015). Subsequent studies revealed the time-
varying correlation between stock and bond returns
and examined the critical factors that influence the
relationship. The large variation and particularly the
negative spells in the correlation have been attributed
to factors such as the flight to safety episodes inducing
investors to dump equities in favour of bonds (Baur
and Lucey, 2009) and illiquidity (Baele et al., 2010).
Macroeconomic stability, which is characterised
by factors such as inflation, inflation expectations
and economic growth can influence correlation
between the returns of the two assets. According to Li
(2002), who examines the impact of macroeconomic
factors on the stock-bond correlation in G-7 countries,
shows that uncertainty about inflation expectations
predominantly determine the trend in stock-bond
correlation. Dimic et al., (2016) highlight that over
short horizons, monetary policy stance is the most
important factor while over longer horizons inflation
and stock market uncertainty are important. In a
similar vein, Hasseltoft and Burkhardt (2012) link the
114
Stock-Bond Correlation and the Macroeconomy:
Evidence from India
sign switches in the correlation to the joint dynamics
of inflation and output and find that inflation
uncertainty had a uniform negative impact on stock
prices throughout the period of study but the impact
on nominal bond prices switched from negative
to positive around 2000. This resulted in inflation
uncertainty predicting positive stock-bond correlation
in pre-2000 period and negative correlation post-2000.
The authors argue that the negative or positive impact
of inflation uncertainty on bond prices is determined
by the correlation of inflation with real growth.
The paper estimated a regime-switching model and
concluded that negative correlation between the
stock-bond returns in the early 2000s in the US can
be attributed to the shift in the cyclical nature of the
inflation from long-lived countercyclical to procyclical.
Baele and Van Holle (2017) report that apart from
cyclicality of inflation, monetary policy stance also
helps in understanding the dynamics of stock-bond
correlations. However, in this research work we
restrict ourselves only to macroeconomics regimes for
exploring the correlation dynamics between stock and
bonds.
III. Data and Methodology
In this study, for stocks, returns are calculated
using the daily BSE Sensex total return index.
The CCIL Broad and CCIL Liquid indices serve as
benchmark indices for the bond markets, allowing for
the evaluation of bond market performance. For this
study, we employ CCIL Broad total return index (TRI)
which tracks the performance of top twenty traded
bonds and provides the daily change due to both price
movements as well as accrued coupons. While the
Sensex total return data is available from 20034, the
CCIL bond index is available from 2004. Accordingly,
the study used the monthly data from April 2004 to
August 2023. Both indices are sourced from Bloomberg.
4 While the Sensex data is available from 1978-79, the index shifted to a
free-float methodology in January 2003.
RBI Bulletin January 2024
Stock-Bond Correlation and the Macroeconomy: ARTICLE
Evidence from India

The study employs monthly data, the highest
frequency at which key macroeconomic variables
such as consumer price index (CPI) and the index of
industrial production (IIP) are available. Due to base
year revisions, splicing method is used to generate a
consistent series for CPI and IIP. Macroeconomic data
are extracted from the Reserve Bank of India’s (RBI)
database on Indian economy (DBIE) and Ministry of
Statistics and Program Implementation (MoSPI).
III.1 Measuring Stock-Bond Correlations
For modelling covariances, several GARCH-based
methodologies exist like the constant conditional
correlation model (Bollerslev, 1990), the BEKK model
(Engle and Kroner, 1995) and the dynamic conditional
correlation model (Engle, 2002). The GARCH
methodology encounters two primary challenges as
highlighted by McMillan and Speightl (2010). The first
is the tractable estimation of parameters. For instance,
a bivariate-GARCH (1,1) model with a full specification
requires twenty-one parameters. The second issue is
the existence of various GARCH specifications created
to capture various data facets, such as asymmetric and
long-memory effects. These two challenges together
imply that no single GARCH specification is superior,
and different GARCH specifications may yield varying
results. Taking cognizance of this and the relatively
small sample in our case, we employ the Risk Metrics
(Longerstaey and Spencer, 1996) approach which is
based on the Exponentially Weighted Moving Average
(EWMA) of variance/covariance estimator5. Further,
it can be shown that EWMA is just a special case
of a GARCH (1,1) model (Dowd, 2007). The EWMA
covariance model defines the conditional covariance
matrix as:
...(1)
where are sample returns, is the mean of sample
returns and is the decay parameter. We use equal
to 0.97 as suggested by RiskMetrics (Longerstaey and
Spencer, 1996) for calculating monthly volatility.
Then using the conditional covariance matrix, we
can easily back out the correlations as
...(2)
where is the covariance between returns on assets
i and j and is the variance of ith asset.
The EWMA correlation between BSE Sensex
total return index and CCIL broad total return
index has varied from a high of 0.42 in June 2008
to a low of (-) 0.22 during November 2008 with an
overall average of around 0.06 (Chart 3). The spells
of negative correlation were relatively short lived as
Chart 3: Correlation between Stocks and
Bonds in India
GFC

5 Several other methodologies like DCC (Dynamic Conditional

Covid-19
Correlation) and DCC MIDAS (Dynamic Conditional Correlation-Mixed
Data Sampling) are employed in the literature for modelling time varying
correlation/co-movement. DCC has the flexibility of univariate GARCH
model coupled with parsimonious parametric model for correlation (Engel,
2001). The DCC-MIDAS is an extension of DCC that incorporated mixed
frequency data. The mixed data sampling allows researchers to model
the correlation dynamics between high frequency (e.g., daily) and low
frequency (e.g., monthly, or quarterly). We experimented with the DCC
and DCC-MIDAS methodologies but faced non-convergence in estimation
for a few specifications. Further, they present model selection issues
such as the appropriate asymmetric term in univariate GARCH models or Note: The correlations are calculated using the exponential weighted moving
average with a decay parameter, λ, equal to 0.97 for the sample from April 2004
the appropriate error distribution. Additionally, for DCC-MIDAS models, to August 2023.
Colacito et al., (2011) find that very long lags of estimated correlations are Sources: Bloomberg; and Authors’ calculations.
required to reliably estimate the long run component of correlation.

RBI Bulletin January 2024 115

ARTICLE
compared to the episodes of positive correlation. This
contrasts with evidence from developed economies –
for instance, Baele and Van Holle (2017) for a sample
of ten developed economies find extended spells of
negative stock-bond correlation post- 2000. In India,
the correlation turned sharply negative from a high
positive value during the GFC due to the flight to
safety where funds may have moved out of equity
into low-risk bonds. Amid tightening of global and
domestic monetary policy in 2022, the correlation
has started to trend upwards following a period of
low negative correlation since 2019 and during the
pandemic.
III.2 Regime Identification
This study aims to relate stock-bond correlations
with various macroeconomic regimes. This section
outlines the methodology to estimate those regimes.
First, we fit univariate regime switching models to
inflation and output gap. The output gap is estimated
from the observed IIP series using the Christiano-
Fitzgerald (CF) filter (2003). The CF filter is a band pass
filter, which retains the components of the time series
with periodic fluctuations between specified time
horizon while suppressing components at higher and
lower frequencies. We use 18 and 96 months as the
low and high frequency parameters while estimating
the cyclical component from the monthly IIP series.
We model a random series xt, with ‘x’ being either
output gap or inflation, using a regime switching in
mean model:
...(3)
where represents the regime dependent mean of
xt . The parameter depends on the variable St, which
follows a first order Markov-Chain with two regimes
with transition probabilities:
...(4)
116
Stock-Bond Correlation and the Macroeconomy:
Evidence from India
Table 1: Univariate Regime Switching Model
Estimates for Inflation and Output Gap
Inflation Output Gap
5.09*** 2.39***
(0.13) (0.31)
9.62*** -4.53***
(0.24) (0.35)
2.32*** 6.93***
(0.24) (0.58)
0.99*** 0.98***
(0.00) (0.01)
0.98*** 0.97***
(0.01) (0.01)
Note: i) The table reports the estimates from a 2-state regime switching
model for Inflation and Output gap as in (3). We allow for
regime switches in the mean only. The estimated parameter and
corresponding quasi-ML standard errors are in parentheses.
ii) Pi is the probability of the model in state i to stay in state i.
iii) Significance levels: *p<0.1; **p<0.05; ***p<0.01.
Source: Authors’ estimates.
where i and j are two different regimes.
IV. Results6
The results from univariate regime switching
model on inflation and output gap are presented in
Table 1. For inflation, we identify two regimes with
moderate (5.09 per cent) and high (9.62 per cent)
inflation. On the other hand, for the output gap we
identify expansion (2.39 per cent) and contractionary
regimes ((-) 4.53 per cent). Inflation rate is found to
be less volatile compared to output gap. Chart 4a &
4b plot the identified regimes with the corresponding
macroeconomic variable. For inflation, the period
between February 2008 till February 2014 is identified
as a high inflation period. While for our estimated
output gap, three periods each of expansion and
contraction are identified. The sharp contraction
6 All estimations and regressions have been carried out using
‘statsmodels’ package (Seabold and Perktold, 2010) in Python.
RBI Bulletin January 2024
Stock-Bond Correlation and the Macroeconomy:
Evidence from India
Chart 4: Estimated Macroeconomic Regimes
a. Inflation Regimes
Source: RBI; and Authors’ calculations.
and reversal during the Covid-19 pandemic features
prominently in our estimated regimes.
To test whether the stock-bond correlation is
systematically different across various macroeconomic
regimes, the following model is estimated.
...(5)
where is the Fisher-transformed7 correlation
between stock and bond returns. is a dummy
variable which is one when macro variable ‘z’ is in
state i = 1,2,…,N.
Using univariate regimes, results indicate the
presence of comparatively higher and positive stock-
bond correlation during moderate inflation regimes
and high growth/expansionary regimes. However,
the fit of these univariate models is found to be low.
To account for both inflation and growth dynamics
7 We calculate the Fisher transformed correlation (Fisher, 1915) at
time t such as with the
being the corresponding correlations calculated using the EWMA model.
This transforms the range from (-1,1) to (-∞, ∞).
RBI Bulletin January 2024
ARTICLE
b. Output Gap Regimes
simultaneously, column (c) presents the result
of a model including all possible interactions8 of
identified univariate regimes for inflation and output
gap. Current inflation plays an important role in
forming future expectations about inflation. Low and
moderate level of current inflation keeps long term
inflation expectations anchored leading to lower term
premia which boosts valuation of bonds and hence
higher returns on bonds. On the other hand, output
expansion can improve the outlook on corporate
earnings and hence may lead to a rally in stocks.
Therefore, a combination of moderate inflation-
output expansion is expected to exhibit positive
stock-bond correlation. Moderate inflation and output
expansion are found to be associated with higher and
positive stock-bond correlation (Table 2). Additionally,
the model with interaction terms is found to have
higher adjusted R2 and lower predictive error.
8 This uses interaction terms of different univariate regime. For example,
moderate inflation – expansionary regime will use the product of moderate
inflation and high growth dummies.
117
ARTICLE Stock-Bond Correlation and the Macroeconomy:
Evidence from India

study investigates how different macroeconomic

Table 2: Stock-Bond Correlation and
Macroeconomic Regimes regimes interact with stock-bond correlations in India.
Inflation Output gap Inflation-Output
It is observed that spells of negative correlation are
Regimes (a) Regimes (b) gap Regimes relatively ephemeral in India compared to episodes
interaction (c)
of positive correlation. Sentiments of risk aversion in
Moderate Inflation 8.04***
(3.08) financial markets can switch correlation from positive
High Inflation 0.98 to negative. A moderate inflationary environment
(2.40)
Expansionary 7.16** contiguous with expansion in output is associated
(3.17) with positive stock-bond correlation.
Contractionary 3.73
(3.08) References
Moderate Inflation- 10.41***
Expansionary (3.02) Apergis, N. (1996). The cyclical behavior of prices:
Moderate Inflation- 4.45
Contractionary (4.15) evidence from seven developing countries. The
High Inflation- 0.14 Developing Economies, 34(2), 204-211.
Expansionary (3.26)
High Inflation- 2.21 Baele, L., & Van Holle, F. (2017). Stock-bond
Contractionary (2.60)
Adjusted R2 (%) 10.1 2.3 15.3 correlations, macroeconomic regimes and monetary
MAD 7.38 8.52 7.37 policy. Available at SSRN 3075816.
Hit ratio (%) 62.9 62.9 62.9
Baele, L., Bekaert, G., & Inghelbrecht, K. (2010). The
Note: i) This table reports the estimated parameters of the regression
of the (Fisher-transformed) stock-bond correlations (estimated determinants of stock and bond return comovements.
using the EWMA model) as per (5).
ii) The parameter estimates capture the average stock-bond The Review of Financial Studies, 23(6), 2374-2428.
correlations across the different macroeconomic regimes. We
use Newey-West standard errors (24 lags) to correct for the Baur, D. G. (2010). Stock-bond co-movements and
substantial serial correlation in the dependent variable.
iii) MAD is the Mean Absolute Difference computed between the cross-country linkages. International Journal of
fitted and empirically observed correlations (from the EWMA Banking, Accounting and Finance, 2(2), 111-129.
model). Hit ratio (%) represents the % of observations where the
fitted and observed correlations share the same sign.
iv) The columns (a)-(c) show regression results using regime
Baur, D. G., & Lucey, B. M. (2009). Flights and
dummies for inflation, output gap and interaction dummies contagion—An empirical analysis of stock–bond
between inflation and output gap regimes, respectively.
v) Significance levels: *p<0.1; **p<0.05; ***p<0.01 correlations. Journal of Financial stability, 5(4), 339-
Source: Authors’ estimates.
352.
Bekaert, G., & Engstrom, E. (2010). Inflation and the
V. Conclusion
stock market: Understanding the “Fed Model”. Journal
Modern portfolio theory and portfolio of Monetary Economics, 57(3), 278-294.
optimisation aims to maximise overall returns within
Bollerslev, T. (1990). Modelling the coherence in
an acceptable level of risk. Analysing asset correlations
short-run nominal exchange rates: a multivariate
play an important role in achieving this objective.
generalized ARCH model. The review of economics
Negatively correlated assets act as a hedge against each
and statistics, 498-505.
other and protect the overall portfolio from extensive
drawdowns during periods of high volatility. An Brixton, A., Brooks, J., Hecht, P., Ilmanen, A., Maloney,
analysis of stock-bond correlation can thus play an T., & McQuinn, N. (2023). A Changing Stock–Bond
important role in asset allocation decisions as these Correlation: Drivers and Implications. The Journal of
are two of the most important asset classes. This Portfolio Management, 49(4), 64-80.

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Evidence from India
Campbell, J. Y., & Ammer, J. (1993). What moves the
stock and bond markets? A variance decomposition
for long-term asset returns. The journal of finance,
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uncertainty. Review of Quantitative Finance and
Accounting, 45, 59-88.
Christiano, L. J., & Fitzgerald, T. J. (2003). The band
pass filter, International Economic Review, 44(2), 435-
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Colacito, R., Engle, R. F., & Ghysels, E. (2011). A
component model for dynamic correlations. Journal
of Econometrics, 164(1), 45-59.
Dimic, N., Kiviaho, J., Piljak, V., & Äijö, J. (2016). Impact
of financial market uncertainty and macroeconomic
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markets. Research in International Business and
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Dowd, K. (2007). Measuring market risk. John Wiley
& Sons.
Engle, R. (2002). Dynamic conditional correlation: A
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Engle, R. F., & Kroner, K. F. (1995). Multivariate
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Fleming, J., Kirby, C., & Ostdiek, B. (1998). Information
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119
ARTICLE Stock-Bond Correlation and the Macroeconomy:
Evidence from India

Annex 1

Chart A1 plots the inflation cycle with output gap in India from April 2004 to August 2023. The cyclical component of
both the series are obtained using the Christiano-Fitzgerald filter. The contemporaneous correlation between inflation
cycle and output gap is found to be (-) 0.49 for the entire sample period.

Chart A1: Countercyclicality of Inflation Cycle with Output Gap

Source: RBI; and Authors’ calculations.

120 RBI Bulletin January 2024

Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey
Agriculture Supply Chain
Dynamics: Evidence from
Pan-India Survey
by D. Suganthi, Rishabh Kumar and
Monika Sethi^
This article attempts to explore the dynamics of agriculture
supply chain by estimating the farmers’ share in consumer
prices through a pan-India survey of farmers, traders
and retailers. The survey finds that the average share of
farmers in output value varies between 33 and 70 per
cent across various crops. Regarding other supply chain
players, retailers’ mark-ups are generally observed to be
higher than those of traders. Empirical analysis suggests
that improvements in agriculture market density at the
district level, which captures spatial competition, and
stepping-up of market infrastructure potentially reduce
traders’ mark-ups and improve the efficiency of the
agriculture sector supply chain.
Introduction
The COVID-19-induced supply disruptions, the
war in Ukraine and the frequent weather shocks have
exerted upward pressures on food prices in India since
2020. Higher food prices improve the terms of trade of
households engaged in agriculture, so long as farmers
or farm workers are the net food producers (Headey
and Hirvonen, 2023). However, due to input cost
pressures, supply chain inefficiencies and food price
volatility, the expected impact may not be realised.1
The inefficiencies in the agricultural supply chain
^
The authors are from the Department of Economic and Policy Research
(DEPR), Reserve Bank of India (RBI). The authors are grateful to Shri
Sitikantha Pattanaik, Shri Rajib Das, Shri Arun Vishnu Kumar, Shri Ramesh
Golait, Shri Binod Bhoi, Shri Vimal Kishore and Editorial Committee for
their valuable inputs. The authors are thankful to officials of Directorate
of Marketing and Inspection for sharing the Agmarknet Market Profile
data. The views expressed in the article are those of the authors and do
not represent the views of the RBI.
1 https://www.ifpri.org/publication/role-terms-trade-indian-agricultural-
growth
RBI Bulletin January 2024
ARTICLE
(henceforth agri-supply chain) were exposed when
the outbreak of the pandemic and the accompanying
lockdown led to temporary spikes in wholesale prices
of commodities and reduced their arrivals, whereas
crop production was least impacted (NABARD, 2020;
Lowe et al., 2021).
Recognising the need to enhance and stabilise
farmer’s income, over the years, several initiatives
have been undertaken by the government to expand
marketing opportunities for farmers and to create an
efficient and competitive marketing system. These
include the Model Agricultural Produce Market
Committee (APMC)2 Act of 2003, facilitating direct sales
to traders and retailers outside the ambit of APMC;
deregulation/delisting and exemption of market fees
on fruits and vegetables; and the Model Agricultural
Produce and Livestock Marketing Act of 2017. To
address infrastructural bottlenecks, create value
addition, reduce wastage and transaction costs in the
supply chain, the Government has also undertaken
measures such as Integrated Scheme for Agricultural
Marketing (ISAM), Agriculture Infrastructure Fund
(AIF)3, e-National Agriculture Market (e-NAM),
Pradhan Mantri Kisan Sampada Yojana (PMKSY),
Operation Greens and promotion of farmer producer
organisations.
These policies have contributed to an increase
in the capacity of cold storage, warehouses, market
infrastructure and expansion of e-NAM integrated
mandis. So far, 1389 markets in 23 States and 4 Union
Territories have been linked to e-NAM. The storage
capacity sanctioned under Agricultural Marketing
Infrastructure (sub-scheme of ISAM) has increased
2 Agricultural commodities trade is regulated by the Agricultural Produce
Market Committee (APMC) act, which restricts the sale and purchase of
notified agricultural products within the regulated markets/mandis with
the payment of assigned marketing fees, the price formation is through
open auctions with the help of licensed traders.
3 An umbrella scheme converging various central and state government
schemes for promoting long term investment in post- harvest management
infrastructure.
121
ARTICLE
by 18 per cent during 2015-2019 and the cold storage
capacity by 20 per cent during 2015-2022 (Nuthalapati
and Sharma, 2021; GoI, 2023). Out of `1 lakh crore of
outlay budgeted up to 2025-26 under the Agriculture
Infrastructure Fund, around `20 thousand crore has
been disbursed (up to November 2023). Going forward,
the reforms suggested under the National Logistics
Policy (2022) could further improve the agri-supply
chain. Nonetheless, inefficiencies in the agri-supply
chain arise due to small and scattered marketed
surplus4, the movement of which involves multiple
intermediaries. Policies aimed at further augmenting
infrastructure and rationalising the intermediation
along the agri-supply chain would help limit the price
build-up.
According to the literature, a simple metric to
measure the improvement in the agri-supply chain
is by estimating the wedge between farmgate prices
and consumer prices. It also captures the relative
market bargaining power of farmers in relation to
traders and retailers. Though a bulk of studies focus
on farmers’ share in consumer prices, there is little
evidence of the same using data from a comprehensive
assessment at the all-India level, especially, after the
introduction of the recent set of government policies.
Against this background, this study estimates the
farmers’ share in consumer prices5 through a pan-
India survey6 of farmers, traders and retailers. A
comparison with the previous round of the pan-India
survey conducted in December 2018 (Bhoi et al.,
4 85 per cent of total landholdings in India is held by small and marginal
farmers that account for 40 per cent of the marketable surplus (GoI, 2017).
5 The proportion of the amount that a farmer receives from retail
price paid by the consumer for a food item reflects the efficiency of an
agriculture supply chain. The farmer is the producer of the product and
other intermediaries incur packaging, transportation and storage costs to
deliver that product to the consumer (most of the agricultural products
are consumed without any further processing). Therefore, an efficient
supply chain results into higher share for the farmer if other costs of the
intermediaries are minimised.
6 This article is based on data collected through a primary survey in
collaboration with an outside agency.
122
Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey
2019) is also attempted to reflect upon changing agri-
supply chain conditions.7 Additionally, it examines
the factors influencing traders’ mark-ups. The
results show that the average farmers’ share varies
between 33 and 70 per cent across various crops.
This indicates some improvement from 2018 levels
in products like onions, green chillies and potatoes.
Empirical analysis suggests that improvements in
agriculture market density at the district level reduce
traders’ mark-ups.
The rest of the article is organised into five
sections. A review of the empirical evidence on
farmers’ share and the effects of spatial competition
of agricultural markets on intermediary mark-ups
is covered briefly in Section II. The stylised facts
about inflationary pressures and changing margins
are provided in Section III. Section IV describes the
survey methodology and coverage. The key survey
findings and empirical analysis are presented in
Section V. The concluding observations are provided
in Section VI.
II. Literature Review
The existing empirical literature focusing on the
supply chain dynamics has dealt with the issues of
farmers’ share in consumer prices, price dispersion
between the wholesale and retail markets, variation
in supply chain costs across different commodities
and stakeholders, effects of infrastructural
developments on traders’ and retailers’ mark-ups
and spatial variation in prices realised by farmers due
to market competition (Bhoi et al., 2019; Gulati et al.,
2022; Chand, 2012; Minten et al., 2012; Chatterjee,
2017). Farmers’ share in consumer prices across
different crops, farm size and marketing channels
over different time periods are estimated in a range
of 20-94 per cent (Baig, 1962; Sen and Maurya, 1999;
7 The findings reported in this article could be highly sensitive to sample
coverage and timing of the survey.
RBI Bulletin January 2024
Agriculture Supply Chain Dynamics: ARTICLE
Evidence from Pan-India Survey

Kalita, 2017; Narasalagi and Shivashankar, 2018; Bhoi

Chart 1: FAO’s Food Price Index
et al., 2019; Gulati et al., 2022; Pramanik, 2022). In
the case of fruits and vegetables, it ranged between
28-74 per cent, while for non-perishables (paddy,
pulses, oilseeds), it ranged between 49-76 per cent.
The variation in transaction costs in terms of market
fees, commission agent fees, labour and packaging
costs incurred by different stakeholders across states
and commodities has also been highlighted in the
literature (Bhoi et al., 2019; Gulati et al., 2022).
Infrastructural development in terms of road
networks, market density, tele-density, irrigation
facilities and overall literacy rate in the country helps
in reducing traders’ and retailers’ mark-ups (Bhoi et al.,
2019). Also, as an effect of spatial competition, farmers Source: FAO.

in geographies with high mandi concentrations are

found to realise higher prices (Chatterjee, 2017). registered an increase in both inflation and volatility
Using the monthly price data on 21 commodities during 2020-21 to 2023-24 (till November) over their
across 60 agricultural markets in India, transportation pre-pandemic levels (Chart 3). Analysing the behaviour
infrastructure and distance between market pairs is of mark-ups during such highly uncertain conditions
found to enhance price integration across markets assumes relevance from inflation management and
(Andrle and Blagrave, 2020). While existing studies monetary policy perspectives.
provide evidence suggesting that market infrastructure
improves farmers’ price realisation, however, there is
Chart 2: India’s Headline and Food Inflation
less evidence of these factors affecting traders’ mark-
ups.
III. Stylised Facts
The overlapping shocks after the pandemic led to
sharp increases in the global food price index which
remain above its pre-pandemic decadal average even
today (Chart 1). India’s Food and Beverages inflation
has remained above the CPI target of 4 per cent since
December 2021 (except in May 2023 when it stood
at 3.3 per cent) (Chart 2). Further, the disaggregated
picture shows wide variations in inflation and its
volatility across components. For instance, major food
components such as ‘cereals and products’, ‘milk and
Sources: MoSPI and Authors’ calculations.
products’, ‘meat and fish’, ‘oil and fats’ and spices

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ARTICLE Agriculture Supply Chain Dynamics:
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Chart 3: Inflation and its Volatility across Sub-groups of CPI- Food and Beverages
a. Average Inflation b. Inflation Volatility

Notes: 1. Figures in parentheses indicate weight of the commodity in CPI-Food and Beverages.
2. Inflation volatility is measured as standard deviation.
Sources: MoSPI and Authors’ calculations.

The trends in price dispersion between
retail (paid by the end-consumers) and mandi
prices (assumed to reflect the price received by
farmers) have been initially examined using
secondary data. An increase in the spread between
retail and mandi prices is evident for paddy/rice
and groundnut, while it is broadly unchanged for
other crops (Chart 4).8 The margins could vary across
crops for several reasons, such as transaction costs,
wastage during transit, length of the holding cycle,
mandi-level competition, infrastructure facilities,
etc. These aggregate margins do not capture the
mark-ups9 at various stages of the supply chain (i.e.,
traders and retailers) and between production and
consumption centres and therefore, analysis of the
process of price build-up from farm to retail level
requires in-depth analysis. The survey is designed to
fill this gap.

8 The trends in margins are depicted for select crops covered under the
current survey (one crop in each crop group).
9 Margin is the difference between the retail price received from the
consumer and the mandi price paid to the farmer while mark-up is the
difference between revenue and total cost (including transaction cost) as
per cent to total cost.

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Agriculture Supply Chain Dynamics: ARTICLE
Evidence from Pan-India Survey

Chart 4: Mandi Prices vis-à-vis Retail Prices for Key Food Items
a. Cereals: Rice b. Pulses: Arhar/Tur

c. Vegetables: Onion d. Vegetables: Tomato

e. Edible Oils: Groundnut f. Fruits: Banana

Sources: Agmarknet (mandi prices); Department of Consumer Affairs (retail prices) and National Horticultural Board (retail price of banana).

IV. Objectives, Coverage and Methodology of Survey
Survey Objectives
The agricultural market supply chain involves
various market participants, such as farmers,
aggregators, traders, commission agents, wholesalers
and retailers. Commodities flow through these
market participants during exchange operations
based on price signals. Though several agents are
involved in the agri-supply chain across centres,
a simplified form of a supply chain network was
considered for this study. The intermediaries

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ARTICLE Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey

considered between farmers and consumers were outliers, around 6 per cent, based on the estimated
traders and retailers. cost and profit margin per kilogram of traders and
retailers.12
Survey Methodology
V. Survey Findings and Empirical Analysis
Like the 2018 survey, mandis in 85 centres across
16 states for 15 kharif crops were covered using Survey Findings
three separate questionnaires for farmers, traders
The survey findings show that the average share
and retailers. The survey covered a total of 11,169
of farmers in consumer prices varies between 33
respondents (Table 1). The survey was undertaken
per cent and 70 per cent across 13 crops covered
during December 2022-February 2023 in select
in the survey.13 Perishable commodities (mainly
production and consumption centres separately
vegetables such as potato, tomato, brinjal and green
since the supply chain dynamics could differ across
chillies) exhibit a lower share, while a higher share
production centres (the primary producing centres of
is observed in non-perishables such as pulses and
the chosen commodities) and consumption centres
oilseeds (Chart 5). These findings broadly align with
(the major cities).
the existing studies (Gandhi and Namboodiri, 2002;
Two-stage sampling was used to select the Sidhu et al., 2011 and Gulati et al., 2022).
farmers. In the first stage, farmers were selected
Compared to the previous survey, perishables
based on the production and sale of the selected
such as onions, green chillies and potatoes show an
commodities in neighbouring villages of the target
increase in farmers’ share. This might reflect a rise
mandis in the production centres.10 In the second
in farm-level storage structures and market-level cold
stage, farmers were chosen randomly from the
storage capacity and transport facilities, especially for
selected lot. The dataset was cleaned by eliminating
onions and potatoes. However, farmers’ share has
decreased for perishables like bananas, tomatoes and
Table 1. Survey Coverage brinjal. During the survey period, i.e., December 2022-
February 2023, tomato prices were very low; therefore,
Survey Mandi/Centre Commodities11
Round the drop in the farmers’ share in the case of tomatoes
Segment Consump- Produc- Total may partly be attributed to supply glut. In the case of
tion tion Cereals: Paddy/Rice
Centres Centres Pulses: Tur, Moong,
rice, the farmers’ share has reduced marginally from
Urad 49 per cent to 45 per cent.14 For oilseeds, the share is
2018 Farmers 1147 1664 2811 Oilseeds: Groundnut,
Retailers 2356 1052 3408 Soyabean around 50 per cent and has fallen from the previous
Traders 2176 1008 3184 Fruits and Vegetables: survey (Chart 6).
Total 5679 3724 9403 Apple, Banana,
Coconut, Onion, Potato, The survey’s second goal was to identify the
2022 Farmers - 2134 2134 Tomato, Green chillies
Retailers 3640 648 4288 and Brinjal factors that affect agricultural commodity price
Traders 3787 960 4747 Spices: Turmeric formation, i.e., between farmers’ price realisation
Total 7427 3742 11169

Source: Primary survey data for 2018 and 2022 and Authors’ estimates.
10 It was observed in the pilot survey that farmers visiting consumption
centres mandis are almost negligible; hence, farmers were covered in the
production centres alone.
11 Bengal gram and red chillies were not covered in 2022 survey.
12 Telephonic verification of select respondents was carried out for
robustness purposes.
13 Two crops namely coconut and apple were dropped due to insufficient
records/data.
14 In the case of rice, paddy is considered to estimate the share of farmers
in consumer prices.

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Agriculture Supply Chain Dynamics: ARTICLE
Evidence from Pan-India Survey

Chart 5: Farmers’ Share in Consumer Prices

Source: Authors’ calculations based on survey data for 2022.

and the price charged by retailers. According to the
survey, farmers, traders, and retailers incur various
charges during commodity transactions. For farmers,
post-harvest costs primarily include commissions and
mandi charges, loading/unloading charges, packing,
weighing and grading charges. For traders and retailers,
the factors influencing their mark-ups include
membership fees, transport costs, shop rentals, local
taxes, and storage costs. Although the sensitivity of
mark-ups to these factors varies across commodities
and regions/states, the survey’s findings, i.e., average
costs across commodities and centres, are consistent
with existing literature (Gulati et al., 2022; Minten et
al., 2012) [Table 2].

Chart 6: Farmers’ Share in Consumer Prices (2022 vis-à-vis 2018)

Increased/Stable Decreased

Source: Authors’ calculations based on survey data for 2018 and 2022.

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ARTICLE Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey

transit, etc. Across all commodities, retailers’ mark-

Table 2: Costs Influencing Mark-ups
ups were found to be generally higher than those
Farmers Traders Retailers
of the traders in both production and consumption
• Mandi charges: 1-2% • Membership fee: • Shop rentals:
• Commission: `3660/year `6841/month centres, which may reflect significant product loss at
1-3% for grains; • Cess/taxes: `2/kg to • Local taxes and the retail stage, especially for perishables. Also, the
5-7% for fruits and `3/kg other costs: `1.9/kg
vegetables traders’ and retailers’ mark-ups for non-perishables
• Labour charges: • Labour charges:
• Loading/Unloading `1.2/kg `1.3/kg were lower than perishables (Chart 7).
charges: `1/kg • Transport cost: • Transport cost:
• Packing: `1.5/kg `1.8/kg `1.4-2.1/kg The traders’ and retailers’ mark-ups in this round,
• Weighing: `1.1/kg • Storage cost: `1/kg compared to 2018, have remained stable for non-
• Grading: `1.2/kg
perishables; however, in the case of perishables, some
Source: Authors’ calculations based on survey data for 2022.
fruits and vegetables have witnessed an increase
while others have exhibited a decline (Chart 8).
Additionally, the mark-ups of traders and retailers,
defined as selling price less total cost (cost of products Around 70 per cent of the respondents revealed
and transaction costs) as a percentage of the total lower or sluggish crop arrivals in the market (Chart
cost, may differ amongst crops for a variety of factors, 9a) and these were mainly believed to be due to
including storage cost depending on the length of the excessive/ extended rainfall in some regions and
holding cycle, and quality including crop loss during delayed/deficient rain in other regions (Chart 9b).

Chart 7: Traders’ and Retailers’ Mark-ups

a. Production Centre b. Consumption Centre

Source: Authors’ calculations based on survey data for 2022.

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Agriculture Supply Chain Dynamics: ARTICLE
Evidence from Pan-India Survey

Chart 8: Traders’ and Retailers’ Mark-ups in 2022 vis-à-vis 2018

a. Traders - Production Centre b. Traders - Consumption Centre

c. Retailers - Production Centre d. Retailers - Consumption Centre

Sources: Authors’ calculations based on survey data for 2018 and 2022.

Regarding awareness of the prevailing market prior information on market prices for sale (Chart 10a).
prices, 59 per cent of the surveyed farmers possessed The main source of information being other farmers

Chart 9: Crop Arrivals in Markets – Traders’ Views

a. Change in Crop Arrivals as Compared to Last Year (Per cent) b. Reasons for Stagnant or Lower Crop Arrivals in the Market as
Compared to Last Year

Note: Response percentages may not sum up to 100 per cent as the question allows for respondents to choose multiple options.
Source: Authors’ calculations based on survey data for 2022.

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ARTICLE Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey

Chart 10: Price Awareness among Farmers

a. Awareness about Prevailing Market Price before Selling b. Source of Price Information
(Per cent)

Note: Response percentages may not sum up to 100 per cent as the question allows for respondents to choose multiple options.
Source: Authors’ calculations based on survey data for 2022.

and traders in their contacts, followed by mobile app/
SMS and others (Chart 10b).
Cash continued to be the dominant mode of
payment for transactions at mandis, as in the 2018
survey, as per the respondent farmers, traders, and
retailers (Chart 11). Regarding electronic payments,
the usage was found to be the highest among traders,
followed by retailers. In comparison to the 2018
survey, the usage has registered a more than 3-fold
increase in the case of traders and a 5-fold increase for
retailers.
To insulate domestic consumers from global food
price spikes, trade policies are resorted to by various
countries across the globe, including India. Only
around 10 per cent of surveyed traders and 13 per cent
of retailers reported being aware of the latest export

Chart 11: Modes of Payment

Note: Response percentages may not sum up to 100 per cent as the question allows for respondents to choose multiple options. Others include redeemable receipts,
vouchers and cheques.
Source: Authors’ calculations based on survey data for 2022.

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Agriculture Supply Chain Dynamics: ARTICLE
Evidence from Pan-India Survey

Chart 12: Response towards Export Restricting Policies: Traders’ View

a. Supply based Restrictions b. Price based Restrictions

Note: Response percentages may not sum up to 100 per cent as the question allows for respondents to choose multiple options.
Source: Authors’ calculations based on survey data for 2022.

restrictions. Among 8 per cent of traders involved in
export operations, the majority indicated that they
had lowered their procurement from farmers in
anticipation of lower prices in the near future (Chart
12a). In response to the price-based export restrictions,
the majority of the traders reported to have passed
on the higher prices to importers and lowered the
procurement prices paid to farmers (Chart 12b).
commodity futures trade and easing stocking limits
would improve agricultural marketing (Chart 14b).
The key findings from the survey conducted
in 2022 indicate that share of farmers in consumer
prices ranges from 33 per cent to 70 per cent with
perishable crops having a lesser share. Farmers’
share has, however, increased for perishables such

As per the majority of the retailers, the trade

Chart 13: Retailers’ Perceptions about
policy measures led to increased market supply and Export Restrictions (Per cent)
lower retail prices (Chart 13). In addition, another
17 per cent of respondents reported that though the
market supply increased but at a slow pace.

Being an important intermediary in the agri-

supply chain, traders’ perceptions and feedback on
government policies and suggestions for further
improvement can enhance the efficiency of agricultural
markets. According to traders, the quality assessment
(assaying) facility in the mandis was reported to be
the most important policy benefiting the traders,
followed by procurement at Minimum Support Price
(MSP) and e-NAM (Chart 14a). Furthermore, according
Source: Authors’ calculations based on survey data for 2022.
to the majority of the traders, free international trade,

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ARTICLE
Chart 14: Policies that Benefit Traders – Traders’ View
a. Policy Measures Benefitting Traders
Note: Response percentages may not sum up to 100 per cent as the question allows for respondents to choose multiple options.
Source: Authors’ calculations based on survey data for 2022.
as potatoes, green chilies, and onions, since the 2018
survey. Mark-ups observed at the retail level were
generally greater than those of the traders, indicating
substantial product loss in the supply chain,
particularly with regard to perishables. Electronic
payments for traders and retailers have increased
substantially since the 2018 survey, although
cash transactions continue to dominate among all
participants. Traders expressed a preference for
futures trade and relaxation of trade and stockpiling
restrictions for improving agricultural marketing
while stating that export restrictions increase
domestic supply and reduce prices. Additionally,
e-NAM, procurement at MSP, and quality assessment
(assaying) facilities were reported to be advantageous
to traders.
Traders’ Mark-up Determinants: An Empirical Analysis
Using survey data and mandi profile data15,
an empirical exercise was attempted to investigate
15 Mandi profile data was obtained from the Directorate of Marketing and
Inspection that provides information on district level number of markets
and other facilities available at the mandi. (https://agmarknet.gov.in/
market_profile/Home.aspx)
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Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey
b. Government Measures that can Improve Marketing
factors that potentially influence traders’ mark-ups.
By pooling district and crop level data, the following
multivariate regression equation was estimated using
the Ordinary Least Squares (OLS):
where, i, d, c and s represent ‘trader’, ‘district’,
‘commodity’ and ‘state’, respectively.
Here, is the mark-up, defined as the selling
price less total cost (including transaction cost) as
a percentage of total cost for traders. represents
traders’ characteristics, which include age, education,
perception about commodity supply compared to last
year, and reported number of other traders in the mandi
for the reference commodity (commodity in which the
trader is dealing with). Amongst key variables, traders’
perception about lower supply compared to last year is
expected to positively influence their mark-up while
within market competition (measured by number of
traders in a mandi) is expected to dampen the traders’
mark-up. is the transaction cost incurred per kg and
is expected to have a negative influence on the mark-
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Agriculture Supply Chain Dynamics: ARTICLE
Evidence from Pan-India Survey

up charged by traders. indicates market density and rainfall deficiency was explored. Additionally,
(i.e., ratio of number of mandis to number of villages in Model 4, considering rainfall deficiency dummy
in the district), which captures the spatial market as instrument for storage decision of traders, a 2SLS
competition and is anticipated to negatively influence model was estimated (Table 3).
traders’ mark-up. represents urban density (i.e.,
The empirical results suggest that transaction
ratio of urban population to total in the district), a
costs (including transportation, labour charges, mandi
demand-side factor, expected to positively influence
taxes and storage costs) are negatively correlated with
traders’ mark-up.16 indicates rainfall deviation
traders’ mark-ups. The rainfall deficiency is associated
from long period average (LPA) [dummy variable takes
with higher mark-ups for the traders. Though
‘1’ if cumulative southwest monsoon rainfall is 20
positively associated, consumption demand proxied
per cent below LPA representing deficient and large
by the urban population share has no significant
deficient and ‘0’ otherwise]. It is expected that the
influence on traders’ mark-ups.
dummy variable capturing rainfall deficiency will have
a positive association with traders’ mark-up.
Table 3: Determinants of Traders’ Mark-up:
represents interaction between traders’ decision to
Regression Results
store and actual rainfall deviation in deficient and
Dependent variable: Traders' Traders' Traders' Traders'
large deficient districts. This variable, however, could Mark-ups (Log) Mark-up Mark-up Mark-up Mark-up
(OLS (OLS (OLS (IV 2SLS
be endogenous, as the traders’ decision to store might model 1) model 2) model 3) model 4)
be influenced by expected mark-ups and is expected
Age (Log) 0.020 0.023 0.030 0.066
to positively influence traders’ mark-up. Therefore, (0.05) (0.05) (0.05) (0.07)
Education (D) 0.041 0.066 0.060 0.053
a two-stage least squares (2SLS) estimation has been (0.04) (0.04) (0.04) (0.04)
conducted as a robustness test. and are the Lower supply compared to 0.011 0.015 0.014 0.003
last year (D) (0.03) (0.03) (0.03) (0.04)
vectors of crop and state dummies, respectively, and Transaction cost per kg -0.036*** -0.049*** -0.051*** -0.052**
is the residual. Commodity dummies account for (Log) (0.01) (0.01) (0.01) (0.01)
Deficient rainfall (D) 0.099** 0.103** 0.088*
commodity characteristics. As agriculture is a state (0.05) (0.05) (0.05)
subject, state dummies were incorporated to account Urban population share 0.031 0.044 0.036 0.024
(Log) (0.03) (0.03) (0.03) (0.10)
for variations in policies regulating agricultural trade Number of traders in 0.026 0.029 0.042
and mandi rules. market (Log) (0.04) (0.03) (0.05)
Market density (Log) -0.066*** -0.070*** -0.090*
Model 1 estimates the association between (0.02) (0.02) (0.05)
Storage (dummy) * 0.011*
traders’ characteristics and their mark-ups, accounting rainfall deviation from (0.01)
LPA for deficient districts
for rainfall deficiency, urban density, commodity
Storage (dummy) 0.718
and state dummies. In Model 2, additionally, the (0.65)
Constant 2.356*** 2.055*** 1.970*** 1.836***
competition within mandi was accounted by reported (0.21) (0.25) (0.25) (0.48)
number of other traders for the reference commodity Test for endogeneity: Ho: 2.842
exogenous (p-value) (0.326)
in the mandi and spatial competition was proxied
Number of Observations 4441 3785 3785 3785
by market density variable. Furthermore, in Model R squared 0.261 0.271 0.274 0.231
3, the interaction effect of traders’ decision to store ***,** and * represent 1 per cent, 5 per cent and 10 per cent levels of
significance, respectively.
Note: Figures in parentheses indicate robust standard errors clustered at
16 Urban population share was created using district level population data mandi level.
obtained from Census 2011. Source: Survey data and authors’ estimation.

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ARTICLE
In Model 2, the factor accounting for within
market competition has no significant relationship
with traders’ mark-up, suggesting market imperfection
or possible collusion between intermediaries within
agricultural markets (Banerji et al., 2004). The market
density is, however, negatively associated with traders’
mark-ups. Thus, improving spatial competition and
the availability of better infrastructure amenities in
agricultural markets or mandis, can reduce traders’
mark-ups and ameliorate farmers’ market access.
This finding is consistent with studies highlighting
that farmers are more likely to realise higher prices in
regions with a higher mandi concentration (Chatterjee,
2017). In Model 3, the interactive effect of traders’
decision to store the commodity in rainfall deficient
areas is positive, and thus higher mark-ups seem
to be associated with deficient rainfall. Accounting
for endogenous effect of storage decision, the 2SLS
estimation shows that the storage decision per se
has no influence on their mark-ups.17 Also, the test
for endogeneity accepts the null hypothesis of storage
decision being exogenous.
VI. Conclusion
This article presented the key results from a
pan-India survey conducted during December 2022-
February 2023 to assess India’s agri-supply chain
dynamics and identify factors influencing mark-ups.
Based on the information gathered, it was found that
the average share of farmers in consumer prices varies
between 33 per cent and 70 per cent; perishables, in
comparison to non-perishables, exhibit a lower share
due to their short saleable life cycle. In the case of
perishables such as onions, green chillies and potatoes,
there seems to be some evidence of an increase in
17
Indicators such as the duration of storage, storage capacity, and release
pattern of the stored produce may be more reliable; however, due to
paucity of data on these indicators from the survey, these avenues have
not been investigated.
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Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey
farmers’ share from the similar survey conducted in
2018, which could be due to improvements in farm-
level storage and transport infrastructure. In line with
the previous survey results, retailers’ mark-ups were
generally higher than those of the traders, reflecting
significant product loss at the retail stage, especially
for perishables. According to the surveyed traders,
while export restrictions increase domestic supply
and reduce prices, they would prefer futures trade
and easing of trade and stocking restrictions. The
traders reported benefiting from quality assessment
(assaying) facility in the mandis, procurement at
MSP and e-NAM. While cash transactions dominate
the payments in mandis across all the participants,
electronic payments registered a significant increase
over the 2018 survey for both traders and retailers.
Empirical analysis indicates that while within-
market competition (i.e., an increase in the number
of traders in a mandi) has no significant relationship
with traders’ mark-ups, supply-side improvements
in market density (i.e., an increase in the number of
mandis in a district) enhancing spatial competition
and storage facilities in mandis appear to be associated
with reduced mark-ups of traders. Furthermore, an
increase in transaction costs reduces traders’ mark-
ups. Overall, the survey findings suggest that further
development of agricultural markets, warehouses,
pre-processing facilities, ripening units and cold
storage are critical. These would help in improving
competition, supply management and also reduce
supply chain wastages. These measures could also
help in containing the frequent spikes in food prices
that have been observed in recent years.
References
Andrle, M and Blagrave, P (2020). Agricultural Market
Integration in India. IMF working papers WP/20/115,
International Monetary Fund.
RBI Bulletin January 2024
Agriculture Supply Chain Dynamics:
Evidence from Pan-India Survey
Baig, M.A. (1962) Marketing of Fruits in Andhra
Pradesh. Journal of Agricultural Marketing. 5(1): 16.
Banerjee, A. and Meenakshi, J.V. (2004). Buyer
Collusion and Efficiency of Government Intervention
in Wheat Markets in Northern India: An Asymmetric
Structural Auctions Analysis. American. Journal of
Agricultural Economics. 86(1): 236–253.
Bhoi, B., Kundu, S. Kishore, V and Suganthi, D. (2019).
Supply Chain Dynamics and Food Inflation in India.
RBI Bulletin.
Chand, R. (2012). Development Policies and
Agricultural Markets. Economic and Political Weekly.
47(52): 53-63.
Chatterjee, S (2017). Market Power and Spatial
Competition in Rural India, Quarterly Journal of
Economics, 138(3): 1649-1711.
Gandhi, V.P., and N.V. Namboodiri (2002). ‘Fruit and
Vegetable Marketing and its Efficiency in India: A
Study of Wholesale Markets in the Ahmedabad Area’,
Indian Institute of Management, Ahmedabad.
GoI (2017). Report of the Committee on Doubling
Farmers’ Income, Inter-linkages between Input
Costs, Diversification, Capital Formation and Income,
Department of Agriculture, Cooperation and Farmers’
Welfare, Ministry of Agriculture & Farmers’ Welfare.
GoI (2023). Agricultural Statistics at a Glance 2022,
Department of Agriculture, Cooperation and Farmers’
Welfare, Ministry of Agriculture & Farmers’ Welfare.
Gulati, A., Ganguly, K., and Wardhan, H. (2022).
Agricultural Value Chains in India: Ensuring
Competitiveness, Inclusiveness, Sustainability,
Scalability, and Improved Finance, (Ed) Springer.
Headey, D., and Hirvonen, K. (2023). ‘Higher food
prices can reduce poverty and stimulate growth in
food production’, Nature Food, Vol 4(8): 699-706.
Kalita, B. (2017). Marketing Efficiency, Price Spread,
Share of Farmers in case of horticultural markets of
RBI Bulletin January 2024
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Assam. International Journal of Advance Research and
Development, 2(8):62-72.
Lowe, M., Nadhanael, G. V. and Roth, B. N. (2021).
India’s food supply chain during the pandemic. Food
policy, 105, 102162.
Minten, B., Vandeplas, A., and Swinnen, J.F.M.
(2012). Regulations, brokers, and interlinkges: the
institutional organisation of wholesale markets in
India. Journal of Development Studies 48, 864-886.
Narasalagi, V. M. and Shivashankar K (2018). Analysis
of producer’s share in consumer’s rupee in marketing
of selected vegetable through different supply chains.
International Journal of Innovative Research and
Studies, 8(II).
National Bank for Agriculture and Rural Development
(NABARD) (2020). Impact Assessment of COVID-19 on
Indian Agriculture and Rural Economy. Survey Report
by Department of Economic Analysis & Research
(August, 2020).
Nuthalapati, C. S. and Sharma, R. (2021). Requirement
and Availability of Cold-Chain for Fruits and Vegetables
in the Country. Research study submitted to Ministry
of Agriculture and Farmers’ Welfare, Government of
India. Published by Institute of Economic Growth,
New Delhi.
Pramanik, B. Das, G., Saha, D. and Mandal, A (2022).
Analysis the producer’s share in consumer’s rupees
and Price spread of selected vegetable and spice crops
in West Bengal Agro Economist, 9(2) 157-160.
Sen,C. and Maurya, R.P.(1999). Producer’s Share in
Consumer’s Rupee-A study of Vegetables. Journal of
Agricultural Marketing. 44(3): 177-179.
Sidhu, R.S., M.S. Sidhu and J.M. Singh (2011).
‘Marketing Efficiency of Green Peas under Different
Supply Chains in Punjab’, Agricultural Economics
Research Review, Vol. 24, pp. 267-273.
135
Climate Stress Testing and Scenario Analysis:
Navigating Uncharted Waters
Climate Stress Testing and
Scenario Analysis: Navigating
Uncharted Waters*
by Amit Sinha^ and Shivang Bhanvadia^
Stress testing/scenario analysis has emerged as a crucial
tool for gauging the impact of climate-related risks for
financial institutions, which are otherwise difficult to
evaluate due to the lack of granular and reliable data.
The Reserve Bank conducted a pilot climate vulnerability
assessment and stress test (VAST) exercise in 2022
involving select banks. The exercise assessed the impact of
climate change on banks and did not aim to assess capital
adequacy or prescribe any minimum capital levels. The
results showed a substantial increase in the credit loss
potential1 of banks due to physical risk and transition risk.
Introduction
The Global Risks Report 2023 published by World
Economic Forum (WEF) identified failure to mitigate
climate change, failure of climate-change adaptation,
and natural disasters and extreme weather events as
the top three risks by severity (likely impact) over a 10-
year period. Climate-related risks have the potential
to affect individuals, entities (including financial
institutions), and the stability of the entire financial
system. The banks are vulnerable to climate risk
through transmission channels mainly comprising of
physical and transition risk drivers. The assessment
of the potential impact arising from climate change
on banks and the corresponding responses are still
developing. Nonetheless, it has become necessary
for banks to evaluate and manage the risks and
* The views expressed herein this article are those of the authors and do
not necessarily represent the views of the Reserve Bank of India.
^
The authors are from the Department of Regulation (DoR). The guidance
and feedback received from Shri Sunil Nair, Chief General Manager, DoR is
gratefully acknowledged.
1 Credit loss potential herein indicate the product of gross fund-based
exposure, probability of default and loss given default.
RBI Bulletin January 2024
ARTICLE
opportunities arising from climate change. Stress
testing has emerged as an important tool for regulators
to assess banks’ capacity to withstand adverse
scenarios and quantify the ensuing impact, if any, on
the banks. It enables the banks to conduct assessment
of risks on a forward-looking basis and promotes
internal and external communication of the bank’s
exposure to various types of risks. The outcome arising
from stress testing is generally utilised by banks
to take decisions on potential actions such as risk
mitigation techniques, contingency plans, and capital
and liquidity management under stressed conditions.
Thus, stress testing has been integrated as a critical
component within the risk management framework
and capital planning, as envisaged in the publication
of the Basel Committee on Banking Supervision
(BCBS) titled ‘An International Convergence of Capital
Measurement and Capital Standards: A Revised
Framework’.2
A climate-related stress test is a comprehensive
assessment of the impact of macroeconomic and
financial variables derived from climate-economy
models and aims at assessing the potential financial
impact that financial institutions may face under
scenarios that reflect varying degrees of risk arising
from climate change vis-à-vis a given baseline
scenario. The main objectives of a climate stress
test are: (i) assess the potential exposure of banks to
climate risks, (ii) assess the potential loss arising due
to climate risks faced by banks, (iii) understand how
climate change could impact the business strategy
of banks, and (iv) develop climate risk management
capabilities in banks.
Assessing the impact of climate risk drivers
through traditional stress tests presents significant
challenges and differs from a traditional stress
testing exercise. Climate-related risks are expected to
2 https://www.bis.org/publ/bcbs128.htm
137
ARTICLE
materialise over longer time horizons than traditional
financial risks. Measuring the impact of climate risk
requires granular exposure data, ideally by region and
sector. Unavailability of such data is a major roadblock
in conducting comprehensive climate risk stress tests.
The requirement of considering longer time horizons
and the need of granular data increases the uncertainty
in quantification of exposure sizes and assessing the
impact on profitability of banks.
Climate scenario analysis exercises are distinct
from the regulatory stress tests. For instance, the
US Federal Reserve Board while conducting its
pilot climate scenario analysis indicated that while
the regular stress tests are formulated to evaluate
whether financial institutions possess sufficient
capital to sustain their lending capacity to individuals
and businesses in the event of a severe economic
downturn or recession, the pilot climate exercises
are exploratory in nature and carry no ramifications
for bank capital or regulatory and/or supervisory
consequences.
In this context, this article gives a snapshot of the
global efforts in monitoring the climate risk faced by
banks and presents a brief on the pilot climate stress
test conducted by the Reserve Bank of India (RBI).
The rest of the article is organised in five sections. In
the next section, we discuss the climate risk analysis
carried out by various regulatory bodies. Section III
focuses on the climate risk drivers and transmission
channels of climate risk through which climate risk
Box I: Overview of Climate Risk Analysis carried out by various Regulatory Bodies
Canada: A pilot project was carried out jointly by the
Office of the Superintendent of Financial Institutions
(OSFI) and the Bank of Canada to conduct climate scenario
analysis. The data gathered for banks pertained to credit
risk and included information on loss-given-default
(LGD), likelihood of default (PD), and anticipated credit
3 https://www.fsb.org/2022/10/supervisory-and-regulatory-approaches-to-climate-related-risks-final-report/
138
Climate Stress Testing and Scenario Analysis:
Navigating Uncharted Waters
drivers translate into the financial risks. In section IV,
we discuss the objective, approach and methodology
adopted for the pilot VAST exercise. We list out the
findings of exercise in section V. Lastly, a way forward
on climate stress testing for regulated entities (REs) in
India is presented in the section VI.
II. Global Practices on Climate Risk Stress Testing
Globally, regulatory authorities have taken the lead
by initiating measures and are trying to understand
implications that climate-related risks can have on
banks and other REs. The first step in this direction
was enhanced disclosure of climate-related financial
risks as outlined in the 2017 report of the Financial
Stability Board’s (FSB’s) Task Force on Climate-related
Financial Disclosures (TCFD). Since then, growing
efforts have been made to quantify banks’ exposure
to climate risks. The approaches adopted by various
central banks to monitor climate-related risks are
at an early stage of development. These approaches
include formulating climate disclosure requirements,
ad hoc surveys, targeted information requests and
use of climate risk stress test and scenario analysis.
Climate scenario analysis (climate stress test) has
been the primary tool employed to capture climate-
related risks and credit risk is the most commonly
analysed financial risk. An overview of climate risk
analysis carried out by various regulatory bodies as
published by FSB in the report3 titled “Supervisory
and Regulatory Approaches to Climate-related Risks”
is summarized below.
loss (ECL). In addition to the quantitative data, a survey
of the risk management practices, and governance of the
participants was conducted.
European Union: In 2021, the European Central Bank
(ECB) conducted a climate stress test that utilised
extensive information from banks and other corporations,
(Contd.)
RBI Bulletin January 2024
Climate Stress Testing and Scenario Analysis:
Navigating Uncharted Waters
containing both past and future climate and financial data.
The test aimed to encompass the various ways climate
risk affects the economy and its transmission channels
over the next thirty years.
France: The Autorité de contrôle prudentiel et de
résolution (ACPR) of Banque de France carried out a pilot
exercise in 2020 related to climate related risks, wherein
data was gathered from banks and insurers. It pertained
to their exposure to different sectors and geographic
regions. Additionally, quantitative data concerning credit
and market risks, such as PD and LGD, was also collected.
Italy: Banca d’Italia conducted a climate stress test using
survey and other data to estimate the effects of carbon
taxes on financially vulnerable firms and households.
Japan: The Japan Financial Services Agency (FSA) through
its climate scenario analysis collects quantitative data
including sector-wise lending exposures, credit costs
as well as qualitative information such as governance,
management actions.
Singapore: The Monetary Authority of Singapore (MAS)
analysed the macroeconomic consequences of physical
III. Climate Risk Drivers and Transmission Channels
of Climate Risk
Climate Risk Drivers
Climate risk drivers can be classified into two
primary categories: physical risks and transition risks.
Physical risks originate from severe weather incidents
like floods, cyclones, drought, and heatwaves. The
physical risk drivers have the potential to cause loss
of lives, damage to properties as also affect livelihood.
Transition risks result from the changes in policies
designed to control/ mitigate the economic/ social
costs associated with transitioning to a greener
economy, technological advancements, changing
consumer/ investor preferences, constraints on trade
RBI Bulletin January 2024
ARTICLE
risks by conducting a simulation that assessed the impact
of a significant flood. This simulation drew upon the
damages caused by previous flooding incidents in the
Southeast Asia region for reference.
United Kingdom: The Bank of England launched the
Climate Biennial Exploratory Scenario (CBES) in June
2021. Under the exercise, information on banks’ clients
and their exposure and their plans to deal with impact
under different climate scenarios was gathered.
United States of America: Recently, Federal Reserve
Board initiated a pilot climate scenario analysis
exercise aimed at gaining insights into the climate risk
management practices and challenges faced by major
financial institutions. The objective of the pilot exercise
is to strengthen the capacity of both major banking
organizations and supervisory authorities to recognize,
assess, measure, oversee, manage and mitigate financial
risks associated with climate change.
Source: Supervisory and Regulatory Approaches to
Climate-related Risks: Final report, published by Financial
Stability Board.
policies that impact the availability and affordability
of both existing and emerging technologies4.
Physical risk drivers can be further categorised into
two types: acute and chronic events. Acute physical
risk drivers involve sudden and severe weather events,
including floods, heatwaves, landslides, storms, and
wildfires. Chronic physical risk drivers result from
the long-term changes in climate, such as variations
in precipitation, increases in sea levels, and changes
in average temperatures.
4 For more information, see Report on Currency and Finance
2022-23 published by Reserve Bank of India available at
https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/
RCF03052023395FAF37181E40188BAD3AFA59BF3907.PDF
139
ARTICLE
Transition risk drivers emerge from modifications
in policies implemented by governments and
regulators to transition towards a low-carbon economy,
technological advancements that enable the transition,
changes in consumer and market sentiment towards
less carbon-intensive products or investments. In
addition, greater awareness and sensitivity to climate
change may raise the reputational and litigation risks
for corporations and banks.
Transmission Channels
Transmission channels refer to the causal chains
that facilitate the manifestation of climate risk drivers
into the financial risks encountered by banks. The
BCBS divides these transmission channels into two
categories: microeconomic and macroeconomic.
The microeconomic transmission channel refers
to the causal pathways that connect climate risk
drivers to the individual counterparties of banks, their
operations, and funding capacity. It encompasses the
Chart 1: Translation of Climate-related Risk Drivers into Financial Risks of Banks
through Transmission Channels
Source: NGFS (2020). “Overview of Environmental Risk Analysis by Financial Institutions”, Network for Greening the Financial System.
140
Climate Stress Testing and Scenario Analysis:
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indirect impacts on the specific financial assets that
banks possess, including bonds, single-name credit
default swaps, and equities.
The macroeconomic transmission channels refer
to the pathways through which climate risk drivers
affect macro-level elements such as economic growth
and labour productivity. It refers to the direct effects
on macro variables like inflation, risk-free interest
rates, and more.
Climate risk drivers do not necessarily represent a
new type of risk, and can be translated into traditional
financial risk categories through transmission
channels (Chart 1). For instance, the effect of a flood
on the profitability of a counterparty may lead to its
incapacity to repay debt, thereby creating credit risk
for the bank. Climate risk drivers, particularly those
transmitted through macroeconomic channels, can
result in elevated credit and market risk for banks.
A policy shift that causes a change in the value of
assets held in a bank’s investment portfolio may
RBI Bulletin January 2024
Climate Stress Testing and Scenario Analysis: ARTICLE
Navigating Uncharted Waters

result in mark-to-market losses being reported, banks’ financial position under severe but plausible
crystallising in market risk for the bank. Climate scenarios.
risk drivers have the potential to cause disruption in The pilot climate VAST exercise 2022 was
asset correlations and alter the liquidity conditions exploratory in nature. The objective of the exercise
of specific assets, undermining the assumptions was to (i) assess how the climate risk could impact
underlying liquidity risk. The banks may be individual banks, (ii) develop climate scenario analysis
vulnerable to increased litigation costs stemming and stress testing capabilities in the banks and within
from climate-sensitive lending or investments. Acute the Reserve Bank, (iii) build in-house capacity in
physical climate risk drivers can affect the operations banks for identifying, measuring, and managing
of bank branches, administrative offices, and data climate related financial risks and (iv) to facilitate and
centres. Governments’ initiatives to move away from promote dialogue with the REs about climate-related
fossil fuels can have repercussions on revenues, and financial vulnerabilities. The intent of the exercise
a bearing on their credit ratings as well as of entities was neither to assess capital adequacy under stress
linked to the sovereign. It is also believed that climate scenarios nor to prescribe any hurdle rates in terms of
change will adversely impact labour productivity minimum capital levels.
and human mortality. These socioeconomic changes
The exercise adopted a hybrid approach (with
could have indirect effects on the banks, influencing
certain datasets provided by the Reserve Bank to the
economic growth and ultimately affecting the
participating banks) covering a total of fifteen banks
creditworthiness of the borrowers.
with a mix of public sector banks, private sector
IV. Pilot Climate Vulnerability Assessment and banks, and foreign banks. The selected banks were
Stress Testing (VAST) – RBI’s Endeavour to Measure amongst the largest banks in terms of asset size in
Climate-related Financial Risks Faced by Banks their respective categories. A static7 balance sheet
approach was used as a proxy for the participating
In 2022, a concise and targeted survey5 was
banks’ extant business models. An assessment of
undertaken among select scheduled commercial
potential loss due to different climate risk drivers
banks in India to refine the regulatory and supervisory
under different climate scenarios, as also the
strategies concerning climate-related financial risks
vulnerability of the interest income of the banks due
and sustainable finance. Subsequently, a consultative
to the transition risk was estimated based on the
discussion paper (DP) on climate risk and sustainable
financial year 2021-22 standalone audited financial
finance covering aspects such as (i) governance (ii)
statements. Given that it was a pilot exercise, data
strategy (iii) risk management, and (iv) disclosure
was collected for three sectors (electricity production,
was issued in July 2022.6 As a follow-up to the
transport and manufacturing) and eleven sub-sectors
comments received on the discussion paper in area
(Chart 2) from the participating banks, which were
of climate stress testing, an exercise was conducted
selected based on the quantum of Greenhouse gas
in October-November 2022 by the Reserve Bank on
(GHG) emissions.8 Each participating bank identified
pilot basis for a forward-looking assessment of the
exposure, impact, and resilience of participating 7 With regard to the evolution of the banks’ balance sheets over the
chosen time horizon, balance sheets were held static at their FY 2022
levels. Static balance sheet assumptions highlight the climate risk inherent
5 h t t p s : / / w w w. r b i . o rg . i n / S c r i p t s / P u b l i c a t i o n R e p o r t D e t a i l s . in current exposures.
aspx?UrlPage=&ID=1215#2 8 As per the “India: Third Biennial Update Report to the United Nations
6 https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=21071 Framework Convention on Climate Change. MoEFCC”. (2021).

RBI Bulletin January 2024 141

ARTICLE
Chart 2: Sectors and Sub-sectors included in the
Pilot Climate VAST Exercise - 2022
Source: RBI.
top five non-financial corporate counterparties in
terms of their gross fund-based exposure, in each of
the aforesaid sectors and furnished the information
in accordance with the requirements stipulated
in the exercise. As part of the exercise, the banks
furnished a mix of quantitative and qualitative data,
under five schedules, to understand their exposures
to financial risks arising from the climate change
under different plausible future scenarios. The data
provided by banks included counterparty specific data
such as gross fund-based exposure as on March 31,
2022, interest income from the counterparty during
the FY 2021-22, and the location of collateral/plant.
The Reserve Bank provided the data on Vulnerability
Factors (VF) for the chosen physical risk hazards, i.e.,
Flood and Cyclone, and transition risk under the
chosen NGFS scenarios. Based on the VFs, the banks
calculated stressed PDs and LGDs under different
scenarios. The stressed PDs, and LGDs were used for
estimating Credit Loss Potential (CLP). CLP calculated
under the stressed scenarios was compared against
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Climate Stress Testing and Scenario Analysis:
Navigating Uncharted Waters
the baseline CLP to estimate the impact on credit risk
of the non-financial corporate counterparties (of the
gross fund-based exposures) arising from physical
and transition risks of the participating banks. Other
risks viz. market risk, liquidity risk, operational risk,
liability risk were not covered in the exercise. The
data from the participating banks was sought in five
Survey schedules. Details on the survey schedules are
provided in the Annex.
V. Stylized Facts and Empirical Findings of Pilot
Climate VAST Exercise - 2022
Stylized Facts
Of the fifteen banks, only few banks reported
that climate-related risk is being included in scenario
analysis and stress testing (SAST) done by them,
and the rest were not including climate risk in their
SAST, due to issues relating to data availability, data
consistency and lack of expertise. Only a few banks
were including climate risk stress test framework in
their Internal Capital Adequacy Assessment Process
(ICAAP). Banks were generally of the view that climate
stress testing exercises may not be considered for
prescribing capital requirements. Banks were also
of the mixed view on the adequacy of data supplied
by the Reserve Bank for carrying out the pilot VAST
exercise. Some banks reported that data provided
were adequate while others indicated otherwise. The
banks reported a number of other challenges faced
by them in conducting the exercise like selection
of counterparties, availability of climate emission
information and modelling them to acceptable
outcomes, getting corporate counterparty information
on geographic location (district/ state-wise, including
location of the manufacturing plants/ collateral, etc.),
estimation of the potential loss key performance
indicators9 (KPIs) based on the associated vulnerability
9 The KPIs were determined based on the Judgmental Forecasting
methods wherein the Risk Management vertical roped in the experts from
other departments/ verticals of the bank (viz. Wholesale Credit/ Credit
Monitoring/ Economic Research/ Sustainability/ Industry Studies etc.).
RBI Bulletin January 2024
Climate Stress Testing and Scenario Analysis:
Navigating Uncharted Waters
factors (VFs) of physical risk and transition risk
drivers faced by a corporate borrower, inadequate staff
proficiency, and reluctance of their counterparties to
provide necessary data.
The banks generally felt that the overall
ecosystem with respect to climate needs to evolve.
They also highlighted the absence of borrower/ sector-
specific climate-related financial risk indicators with
objective, specific, monitorable and measurable
metrics over the next 5-10 years in line with globally
accepted Science Based Targets Initiative (SBTi)10.
Non-availability of climate risk-related stress testing
models/ methodologies that specifically factor India’s
climate goals was cited as a major challenge in
integrating climate risk assessment into banks’ stress
testing framework.
Findings of the Pilot Climate VAST Exercise - 2022
Under the exercise, the assessment of short-
term physical risk included estimation of the impact
of counterparties’ exposure to extreme weather
events, viz., floods and cyclones on banks’ credit
risk. The impact on the banks’ credit loss potential
on consolidated basis due to floods and cyclones was
assumed to be nil under the baseline scenario. The
impact on credit loss potential of banks due to flood
was projected to increase by 66.1 per cent. Similarly,
the impact on credit loss potential of banks due to
cyclone was projected to increase by 65.8 per cent.
Under the tail risk event in the short-term scenario,
participating banks’ credit loss potential was projected
to increase by 138.0 per cent as against the baseline
scenario.
The impact on credit risk of banks due to the
long-term impact of transition risk was assessed
under three scenarios and the increase in credit loss
potential of banks at three time-intervals in year 2030,
2040 and 2050 was measured. Under the Below 2°C
10
The SBTi is a partnership between the United Nations Global Compact,
CDP, World Wide Fund for Nature and World Resources Institute.
RBI Bulletin January 2024
ARTICLE
(orderly) scenario, credit loss potential of banks was
observed to increase by 106 per cent in 2030, 109
per cent in 2040, and 107 per cent in 2050 as against
the baseline scenario. Under the divergent net zero
(disorderly) scenario, credit loss potential of banks was
observed to increase by 110 per cent in 2030, 130 per
cent in 2040, and 146 per cent in 2050 as against the
baseline scenario. Under the nationally determined
contributions (hot house world) scenario, credit loss
potential of banks was observed to increase by 103 per
cent in 2030, 98 percent in 2040, and 92 percent in
2050 as against the baseline scenario.
VI. Way Forward
The exercise, being exploratory in nature,
covered only select REs and sectors with limited
scope. Only two physical risk events, viz., flood and
cyclone were considered out of the thirteen climate-
events identified by the Ministry of Earth Sciences,
Government of India. Going forward, the Climate VAST
exercises may build upon the findings of the pilot
exercise to include other REs too with a larger base of
counterparties, other plausible climate scenarios and
sectors (such as household, commercial, agriculture,
sovereign etc.) based on the economic activity with
the aim of enhancing the banks’ capacity to evaluate
and manage climate risk.
Globally, most of the work on climate stress
testing is restricted to credit risk and therefore,
this pilot exercise also focussed on assessing on the
credit risk the impact of climate-related risk drivers.
Drawing from the learnings of successive stress test
iterations, future exercise may cover other risks faced
by the banks such as market, operational, liquidity,
and litigation risks.
Due to the data and capacity challenges, banks
faced difficulties in modelling the forward-looking
KPIs in pilot Climate VAST exercise. The KPIs were
determined based on the Judgmental Forecasting
methods as also discussions with the concerned
143
ARTICLE
counterparty. However, in future, banks may need to
construct and employ statistical models to calculate
the forward-looking KPIs for the climate-related
financial risks.
Climate scenario analysis and stress testing
initiatives are in an embryonic phase, owing to the
intricacies involved in the scenario analysis and
modelling of climate hazards, as well as the dearth
of requisite data. Nevertheless, it is noteworthy
that the banks and other stakeholders concur that
such initiatives should continue to be refined, and
periodically refreshed in order to identify, assess,
measure, monitor and manage the climate-related
financial risks, and to facilitate informed policymaking
in the years ahead. Thus, there is a consensus that
such coordinated efforts by the RBI, banks and their
counterparties would go a long way in combating the
challenge faced due to climate change. In this context,
it is worth remembering the words of Mahatma
Gandhi: “You may never know what results come of
your actions, but if you do nothing, there will be no
result.”
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age of climate change.”
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announces that six of the nation’s largest banks will
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Climate Stress Testing and Scenario Analysis:
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participate in a pilot climate scenario analysis exercise
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firms to measure and manage climate-related financial
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Risks Report 2023.”
World Health Organization. (2021). “Climate change
and health. Fact sheet.” Retrieved from https://www.
who.int/news-room/fact-sheets/detail/climate-change-
and-health
RBI Bulletin January 2024
Climate Stress Testing and Scenario Analysis: ARTICLE
Navigating Uncharted Waters

Annex

Schedule 1 was a survey to capture qualitative information risk. These disorderly transition shocks could affect
on the participating banks’ existing climate-related banks through their credit exposures to the GHG
financial risk stress testing framework, climate-related sensitive sectors. The disorderly transition scenario,
financial risk management and modelling methods developed by Network for Greening the Financial
employed by the banks. System (NGFS) were used, which envisioned
that the delayed policy measures to reduce GHG
Schedule 2 contained quantitative metrics to capture (a)
emissions led to sudden and unanticipated increase
the GHG emission footprint of the portfolio as regards the
in GHG emission prices in 2030 to achieve the Paris
identified sectors and (b) the sensitivity of banks’ interest
Agreement targets. However, in the pilot exercise, it
income to the transition risk, and the concentration of
was assumed that the increase in the GHG emission
the GHG sensitive assets. The sector-wise GHG Emissions
prices would commence in April 2022 and not in
Intensity Factor (EI Factors) were provided by RBI which
2030 to assess the tail risks in the participating
were estimated on the basis of data from Ministry of
banks’ current balance sheets over a five-year period.
Environment, Forest & Climate Change (MoEFCC) and the
The banks estimated the potential loss in KPIs vis-
Ministry of Statistics and Programme Implementation
à-vis the baseline scenarios for which the relevant
(MoSPI), Government of India. The banks used these EI
macroeconomic and macro-financial parameters
Factors to calculate the GHG emission transition sensitivity
were provided to them.
factors (TSFs) and the vulnerability of their interest
income (VII) in respect of each corporate counterparty. Schedule 4 envisioned that some climate-related financial
risks would materialise within a bank’s traditional three-
Schedule 3 assessed credit risk in the short term. The
to-five-year capital planning horizon while other climate-
assessment was done on account of acute physical risk
related financial risks would materialise over longer time
drivers, viz., floods and cyclones over a one-year time
horizon. It was thus used to assess the credit risks on
horizon. It also included tail risk assessment under a
account of transition risk drivers in a longer-time horizon
Green Swan11 event arising out of disorderly transition
covering three NGFS scenarios (viz. Below 2oC, Divergent
risk drivers. The schedule provided quantitative inputs
Net Zero, and Nationally Determined Contributions) with
on the impact of physical/ transition risks on the credit
a longer time horizon (up to 2050). The relevant temporal
portfolio of the participating banks.
macroeconomic and macro-financial parameters (for
 For physical risks, Vulnerability Factors (VFs) were different future year-points up to 2050) were provided to
constructed based on the events, viz., floods/ the banks for estimating the KPIs under the three NGFS
cyclones and the economic losses caused by these scenarios vis-à-vis the baseline scenarios.
events in about 50 years for each district. These VFs
Schedule 5 required the participating banks to select any
were constructed based on location of the corporate
one corporate counterparty from any of the identified
counterparty and the collateral using the datasets
sectors and carry out their analysis and furnish results
published by the Ministry of Earth Sciences (MoES)
in a free style manner. The information that could be
and Ministry of Jal Shakti (MoJS), Government of
provided included the National Industrial Classification
India for each of the districts. The VFs were in turn
- 2008, asset type, gross exposure, duration of exposure,
provided to the banks for estimating the loss in total
major risks faced by the selected counterparty (transition
income of the counterparty as also the loss in the
risks or physical risks including the specific physical
realizable value of the collateral. The banks estimated
hazard to which it was exposed). The information to be
the potential loss key performance indicators (KPIs)
covered also include as to how the counterparty would
vis-à-vis the baseline scenarios.
adapt to the climate risks or mitigate them, location of the
 The assessment of credit risk on account of transition exposures, location of collateral, banks’ views as to how
risk drivers for tail risk was done in respect of a the corporate counterparty’s KPIs were expected to evolve
Green Swan event arising out of disorderly transition under each scenario and projected periods.

11 “The Green Swan” by Morgan Despres, Patrick Bolton, Frédéric Samama, Luiz Awazu Pereira Da Silva, and Romain Svartzman

RBI Bulletin January 2024 145

CURRENT STATISTICS

Select Economic Indicators

Reserve Bank of India
Money and Banking
Prices and Production
Government Accounts and Treasury Bills
Financial Markets
External Sector
Payment and Settlement Systems
Occasional Series
 CURRENT STATISTICS

Contents
No. Title Page

1 Select Economic Indicators 149

Reserve Bank of India

2 RBI – Liabilities and Assets 150
3 Liquidity Operations by RBI 151
4 Sale/ Purchase of U.S. Dollar by the RBI 152
4A Maturity Breakdown (by Residual Maturity) of Outstanding Forwards of RBI (US$ Million) 153
5 RBI's Standing Facilities 153

Money and Banking

6 Money Stock Measures 154
7 Sources of Money Stock (M3) 155
8 Monetary Survey 156
9 Liquidity Aggregates 156
10 Reserve Bank of India Survey 157
11 Reserve Money – Components and Sources 157
12 Commercial Bank Survey 158
13 Scheduled Commercial Banks' Investments 158
14 Business in India – All Scheduled Banks and All Scheduled Commercial Banks 159
15 Deployment of Gross Bank Credit by Major Sectors 160
16 Industry-wise Deployment of Gross Bank Credit 161
17 State Co-operative Banks Maintaining Accounts with the Reserve Bank of India 162

Prices and Production

18 Consumer Price Index (Base: 2012=100) 163
19 Other Consumer Price Indices 163
20 Monthly Average Price of Gold and Silver in Mumbai 163
21 Wholesale Price Index 164
22 Index of Industrial Production (Base: 2011-12=100) 168

Government Accounts and Treasury Bills

23 Union Government Accounts at a Glance 168
24 Treasury Bills – Ownership Pattern 169
25 Auctions of Treasury Bills 169

Financial Markets
26 Daily Call Money Rates 170
27 Certificates of Deposit 171
28 Commercial Paper 171
29 Average Daily Turnover in Select Financial Markets 171
30 New Capital Issues by Non-Government Public Limited Companies 172

RBI Bulletin January 2024 147

CURRENT STATISTICS

No. Title Page

External Sector
31 Foreign Trade 173
32 Foreign Exchange Reserves 173
33 Non-Resident Deposits 173
34 Foreign Investment Inflows 174
35 Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals 174
36 Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) 175
of the Indian Rupee
37 External Commercial Borrowings (ECBs) – Registrations 176
38 India’s Overall Balance of Payments (US $ Million) 177
39 India's Overall Balance of Payments (` Crore) 178
40 Standard Presentation of BoP in India as per BPM6 (US $ Million) 179
41 Standard Presentation of BoP in India as per BPM6 (` Crore) 180
42 India’s International Investment Position 181

Payment and Settlement Systems

43 Payment System Indicators 182

Occasional Series
44 Small Savings 184
45 Ownership Pattern of Central and State Governments Securities 185
46 Combined Receipts and Disbursements of the Central and State Governments 186
47 Financial Accommodation Availed by State Governments under various Facilities 187
48 Investments by State Governments 188
49 Market Borrowings of State Governments 189
50 (a) Flow of Financial Assets and Liabilities of Households - Instrument-wise 190
50 (b) Stocks of Financial Assets and Liabilities of Households- Select Indicators 193

Notes: .. = Not available.

– = Nil/Negligible.
P = Preliminary/Provisional. PR = Partially Revised.

148 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 1: Select
No. 1: Select Economic
Economic Indicators
Indicators
2022-23 2023-24
Item 2022-23
Q1 Q2 Q1 Q2
1 2 3 4 5
1 Real Sector (% Change)
1.1 GVA at Basic Prices 7.0 11.9 5.4 7.8 7.4
1.1.1 Agriculture 4.0 2.4 2.5 3.5 1.2
1.1.2 Industry 2.4 7.3 -2.5 4.6 13.2
1.1.3 Services 9.5 16.3 8.9 10.0 6.7
1.1a Final Consumption Expenditure 6.4 16.5 6.6 4.9 4.3
1.1b Gross Fixed Capital Formation 11.4 20.4 9.6 8.0 11.0
2022 2023
2022-23
Oct. Nov. Oct. Nov.
1 2 3 4 5
1.2 Index of Industrial Production 5.2 -4.1 7.6 11.6 2.4
2 Money and Banking (% Change)
2.1 Scheduled Commercial Banks
2.1.1 Deposits 9.6 8.9 9.8 12.5 13.5
(13.2) (14.2)
2.1.2 Credit # 15.0 17.0 17.3 15.8 16.7
(20.4) (21.1)
2.1.2.1 Non-food Credit # 15.4 17.4 17.7 16.0 16.8
(20.5) (21.3)
2.1.3 Investment in Govt. Securities 14.5 8.6 10.7 16.8 15.6
(18.9) (17.7)
2.2 Money Stock Measures
2.2.1 Reserve Money (M0) 7.8 11.2 11.0 5.5 6.7
2.2.2 Broad Money (M3) 9.0 9.1 8.9 10.8 11.2
(11.4) (11.8)
3 Ratios (%)
3.1 Cash Reserve Ratio 4.50 4.50 4.50 4.50 4.50
3.2 Statutory Liquidity Ratio 18.00 18.00 18.00 18.00 18.00
3.3 Cash-Deposit Ratio 5.0 5.2 5.3 5.2 5.2
(5.1) (5.2)
3.4 Credit-Deposit Ratio 75.8 74.5 75.0 76.7 77.2
(79.2) (79.6)
3.5 Incremental Credit-Deposit Ratio# 113.0 120.0 128.6 88.7 92.3
(119.5) (118.8)
3.6 Investment-Deposit Ratio 30.0 29.3 29.3 30.4 29.8
(30.8) (30.2)
3.7 Incremental Investment-Deposit Ratio 43.5 41.5 39.7 36.1 27.8
(40.2) (31.8)
4 Interest Rates (%)
4.1 Policy Repo Rate 6.50 5.90 5.90 6.50 6.50
4.2 Fixed Reverse Repo Rate 3.35 3.35 3.35 3.35 3.35
4.3 Standing Deposit Facility (SDF) Rate * 6.25 5.65 5.65 6.25 6.25
4.4 Marginal Standing Facility (MSF) Rate 6.75 6.15 6.15 6.75 6.75
4.5 Bank Rate 6.75 6.15 6.15 6.75 6.75
4.6 Base Rate 8.65/10.10 8.10/8.80 8.10/8.80 8.95/10.10 8.95/10.10
4.7 MCLR (Overnight) 7.50/8.50 6.95/7.85 7.05/8.05 7.95/8.45 7.95/8.50
4.8 Term Deposit Rate >1 Year 6.00/7.25 5.50/7.00 6.10/7.25 6.00/7.75 6.00/7.25
4.9 Savings Deposit Rate 2.70/3.00 2.70/3.00 2.70/3.00 2.70/3.00 2.70/3.00
4.10 Call Money Rate (Weighted Average) 6.78 6.16 6.13 6.74 6.79
4.11 91-Day Treasury Bill (Primary) Yield - 6.40 6.40 6.93 6.96
4.12 182-Day Treasury Bill (Primary) Yield 7.28 6.72 6.73 7.14 7.16
4.13 364-Day Treasury Bill (Primary) Yield 7.31 6.92 6.87 7.16 7.15
4.14 10-Year G-Sec Par Yield (FBIL) 7.31 7.45 7.29 7.35 7.31
5 Reference Rate and Forward Premia
5.1 INR-US$ Spot Rate (Rs. Per Foreign Currency) 82.22 82.41 81.53 83.25 83.37
5.2 INR-Euro Spot Rate (Rs. Per Foreign Currency) 89.61 82.14 84.87 87.90 90.93
5.3 Forward Premia of US$ 1-month (%) 2.41 3.28 2.21 1.02 0.95
3-month (%) 2.19 2.86 2.16 1.33 1.12
6-month (%) 2.31 2.74 2.26 1.71 1.47
6 Inflation (%)
6.1 All India Consumer Price Index 6.7 6.8 5.9 4.9 5.6
6.2 Consumer Price Index for Industrial Workers 6.1 6.1 5.4 4.5 5.0
6.3 Wholesale Price Index 9.6 8.7 6.1 -0.3 0.3
6.3.1 Primary Articles 10.3 11.2 5.9 2.3 4.8
6.3.2 Fuel and Power 29.4 25.4 19.7 -1.6 -4.6
6.3.3 Manufactured Products 5.7 4.4 3.4 -1.1 -0.6
7 Foreign Trade (% Change)
7.1 Imports 16.8 8.0 7.4 9.6 -4.3
7.2 Exports 6.9 -11.5 9.7 6.0 -2.9
Note : Financial Benchmark India Pvt. Ltd. (FBIL) has commenced publication of the G-Sec benchmarks with effect from March 31, 2018 as per RBI circularFMRD.DIRD.
7/14.03.025/2017-18 dated March 31, 2018. FBIL has started dissemination of reference rates w.e.f. July 10, 2018.
#: Bank credit growth and related ratios for all fortnights from December 3, 2021 to November 18, 2022 are adjusted for past reporting errors by select scheduled commercial
banks (SCBs).
Figures in parentheses include the impact of merger of a non-bank with a bank.
*: As per Press Release No. 2022-2023/41 dated April 08, 2022.

RBI Bulletin January 2024 149

CURRENT STATISTICS

Reserve Bank of India

No. 2: RBI
No. 2: RBI -- Liabilities
Liabilitiesand
andAssets
Assets**
(₹
(₹Crore)
Crore)
Item As on the Last Friday/ Friday

2022-23 2022 2023

Dec. Dec. 01 Dec. 08 Dec. 15 Dec. 22 Dec. 29

1 2 3 4 5 6 7

1 Issue Department

1.1 Liabilities

1.1.1 Notes in Circulation 3348235 3203051 3317919 3338132 3335410 3342739 3330399
1.1.2 Notes held in Banking Department 9 15 12 11 12 11 12
1.1/1.2 Total Liabilities (Total Notes Issued) or Assets 3348245 3203066 3317931 3338143 3335422 3342750 3330410
1.2 Assets
1.2.1 Gold 140766 129184 148441 147977 148670 148632 151422
1.2.2 Foreign Securities 3207202 3073515 3169223 3189753 3186384 3193804 3178712
1.2.3 Rupee Coin 277 367 266 413 368 313 276
1.2.4 Government of India Rupee Securities - - - - - - -
2 Banking Department
2.1 Liabilities
2.1.1 Deposits 1354217 1439225 1526080 1487481 1531236 1692117 1660082
2.1.1.1 Central Government 5001 100 100 101 100 100 100
2.1.1.2 Market Stabilisation Scheme
2.1.1.3 State Governments 42 42 42 42 42 42 43
2.1.1.4 Scheduled Commercial Banks 868940 841612 938484 894652 936401 933571 939847
2.1.1.5 Scheduled State Co-operative Banks 8100 8648 8140 7835 8084 7982 8036
2.1.1.6 Non-Scheduled State Co-operative Banks 5177 4403 4931 4704 4927 5037 4984
2.1.1.7 Other Banks 48260 45114 48146 48112 48085 48489 48415
2.1.1.8 Others 316490 457383 398030 419142 432373 585184 555420
2.1.1.9 Financial Institution Outside India 102207 81922 128206 112893 101223 111712 103239
2.1.2 Other Liabilities 1642294 1506375 1669725 1697625 1745325 1779077 1803066
2.1/2.2 Total Liabilities or Assets 2996512 2945600 3195805 3185107 3276561 3471194 3463149
2.2 Assets
2.2.1 Notes and Coins 9 15 12 11 12 11 12
2.2.2 Balances Held Abroad 1008993 1075884 1320919 1330306 1381620 1421956 1455394
2.2.3 Loans and Advances
2.2.3.1 Central Government 48677 - - - - - -
2.2.3.2 State Governments 792 4450 21748 24583 15212 2294 2579
2.2.3.3 Scheduled Commercial Banks 112731 127472 91279 82288 155844 311457 271352
2.2.3.4 Scheduled State Co-op.Banks - 0 - - - - -
2.2.3.5 Industrial Dev. Bank of India - - - - - - -
2.2.3.6 NABARD - 0 - - - - -
2.2.3.7 EXIM Bank - - - - - - -
2.2.3.8 Others 24485 17789 3167 3167 3167 3167 3167
2.2.3.9 Financial Institution Outside India 102128 81790 127708 112869 101465 113033 105356
2.2.4 Bills Purchased and Discounted
2.2.4.1 Internal - - - - - - -
2.2.4.2 Government Treasury Bills - - - - - - -
2.2.5 Investments 1408486 1409345 1372335 1374037 1360105 1359138 1359690
2.2.6 Other Assets 290209 228855 258637 257845 259137 260139 265598
2.2.6.1 Gold 230734 212643 245790 245021 246168 246106 250726

**Data
Dataareare provisional.
provisional.

150 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 3: Liquidity Operations by RBI

No. 3: Liquidity Operations by RBI
(₹ Crore)
(₹ Crore)
Date Standing OMO (Outright) Net Injection (+)/
Liquidity Absorption (-)
Liquidity Adjustment Facility Facilities (1+3+5+7+9-2-4-6
-8)

Sale Purchase
Variable
Variable
Reverse Rate
Repo Rate MSF SDF
Repo Reverse
Repo
Repo

1 2 3 4 5 6 7 8 9 10
Nov. 1, 2023 - - - - 108691 64084 - 110 - 44497
Nov. 2, 2023 - - - - 74113 67089 - - - 7024
Nov. 3, 2023 - - - 20482 44160 52481 - - - -28803
Nov. 4, 2023 - - - - 1540 19890 - - - -18350
Nov. 5, 2023 - - - - 324 6428 - - - -6104
Nov. 6, 2023 - - - - 52444 42557 - - - 9887
Nov. 7, 2023 - - - - 68397 42122 - - - 26275
Nov. 8, 2023 - - - - 124669 48772 - - - 75897
Nov. 9, 2023 - - - - 110181 58780 - - - 51401
Nov. 10, 2023 - - - - 97929 51586 - - - 46343
Nov. 11, 2023 - - - - 14946 5801 - - - 9145
Nov. 12, 2023 - - - - 2161 5837 - - - -3676
Nov. 13, 2023 - - - - 101975 42455 - - - 59520
Nov. 14, 2023 - - - - 4319 11534 - - - -7215
Nov. 15, 2023 - - - - 97042 47916 - - - 49126
Nov. 16, 2023 - - - - 102102 54518 - - - 47584
Nov. 17, 2023 - - - 22442 111386 49482 - - - 39462
Nov. 18, 2023 - - - - 5592 11717 - - - -6125
Nov. 19, 2023 - - - - 399 2407 - - - -2008
Nov. 20, 2023 - - - - 150171 38312 - - - 111859
Nov. 21, 2023 - - - - 223899 43212 - - - 180687
Nov. 22, 2023 - - - - 234073 50062 - - - 184011
Nov. 23, 2023 - - - - 205080 40354 -12 - - 164714
Nov. 24, 2023 - - - - 187699 63832 - - - 123867
Nov. 25, 2023 - - - - 4125 5068 - - - -943
Nov. 26, 2023 - - - - 2043 2543 - - - -500
Nov. 27, 2023 - - - - 6048 11659 - - - -5611
Nov. 28, 2023 - - - - 185214 66892 -725 - - 117597
Nov. 29, 2023 - - - - 175263 63754 722 - - 112231
Nov. 30, 2023 - - - - 119686 63756 - - - 55930

RBI Bulletin January 2024 151

CURRENT STATISTICS

No. 4: Sale/ Purchase of U.S. Dollar by the RBI

i) Operations in onshore / offshore OTC segment

Item 2022 2023

2022-23
Nov. Oct. Nov.

1 2 3 4

1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) -25516 4361 -310 -1929

1.1 Purchase (+) 187054 22281 36650 34986

1.2 Sale (–) 212570 17920 36960 36915

2 ₹ equivalent at contract rate (₹ Crores) -217259 33929 -3604 -15978

3 Cumulative (over end-March) (US $ Million) -25516 -29978 17377 15448

(₹ Crore) -217259 -249702 141063 125085

4 Outstanding Net Forward Sales (-)/ Purchase (+) at the end of month (US
23600 8493 -14608 -11901
$ Million)

ii) Operations in currency futures segment

Item 2022 2023

2022-23
Nov. Oct. Nov.

1 2 3 4

1 Net Purchase/ Sale of Foreign Currency (US $ Million) (1.1-1.2) 0 0 0 0

1.1 Purchase (+) 10930 10 1948 1496

1.2 Sale (–) 10930 10 1948 1496

2 Outstanding Net Currency Futures Sales (-)/ Purchase (+) at the end of 0 0 -4187 -2782
month (US $ Million)

152 RBI Bulletin January 2024

 CURRENT STATISTICS

No.No.
4A4 :A :Maturity Breakdown
Maturity Breakdown (by Residual
(by Residual Maturity) of Maturity)
Outstanding of
Outstanding Forwards of RBI (US $ Million)
Forwards of RBI (US $ Million)

Item As on November 30 , 2023

Long (+) Short (-) Net (1-2)
1 2 3
1. Upto 1 month 3165 24500 -21335
2. More than 1 month and upto 3 months 940 1200 -260
3. More than 3 months and upto 1 year 9694 0 9694
4. More than 1 year 0 0 0
Total (1+2+3+4) 13799 25700 -11901

No.
No.5:
5:RBI’s
RBI’s Standing Facilities
Standing Facilities

(₹(₹Crore)
Crore)

Item As on the Last Reporting Friday

2022-23 2022 2023

Dec. 30 Jul. 28 Aug. 25 Sep. 22 Oct. 20 Nov. 17 Dec. 29

1 2 3 4 5 6 7 8

1 MSF 28388 33224 25417 73658 168348 124191 111386 134232

2 Export Credit Refinance for Scheduled Banks

2.1 Limit - -

2.2 Outstanding - -

3 Liquidity Facility for PDs

3.1 Limit 4900 4900 4900 4900 4900 4900 4900 4900

3.2 Outstanding 2442 2376 3082 3122 3054 3181 3181 3167

4 Others

4.1 Limit 76000 76000 76000 76000 76000 76000 76000 76000

4.2 Outstanding 15900 15400

5 Total Outstanding (1+2.2+3.2+4.2) 46730 51000 28499 76780 171402 127372 114567 137399

RBI Bulletin January 2024 153

CURRENT STATISTICS

Money and Banking No. 6: Money Stock Measures

No. 6: Money Stock Measures
(₹
(₹ Crore)
Crore)

Item Outstanding as on March 31/last reporting Fridays of the month/

reporting Fridays

2022-23 2022 2023

Nov. 18 Oct. 20 Nov. 03 Nov. 17

1 2 3 4 5
1 Currency with the Public (1.1 + 1.2 + 1.3 – 1.4) 3276436 3093618 3201722 3206519 3253867

1.1 Notes in Circulation 3348219 3189066 3272342 3280880 3323773

1.2 Circulation of Rupee Coin 29542 28469 30906 31196 31196

1.3 Circulation of Small Coins 743 743 743 743 743

1.4 Cash on Hand with Banks 102085 124807 102339 106372 101933

2 Deposit Money of the Public 2398359 2262770 2466481 2505136 2523448

2.1 Demand Deposits with Banks 2320598 2192060 2393541 2430860 2449084

2.2 'Other' Deposits with Reserve Bank 77761 70709 72940 74276 74364

3 M1 (1 + 2) 5674795 5356388 5668203 5711655 5777315

4 Post Office Saving Bank Deposits 200257 196053 200257 200257 200257

5 M2 (3 + 4) 5875052 5552441 5868460 5911912 5977572

6 Time Deposits with Banks 16668966 16043534 17934860 18104162 18028414

(18069055) (18236022) (18156648)

7 M3 (3 + 6) 22343760 21399921 23603064 23815816 23805729

(23737259) (23947676) (23933963)

8 Total Post Office Deposits 1113230 1088490 1113230 1113230 1113230

9 M4 (7 + 8) 23456990 22488411 24716294 24929046 24918959

(24850489) (25060906) (25047193)

Note: Figures in parentheses include the impact of merger of a non-bank with a bank.
Figures in parentheses include the impact of merger of a non-bank with a bank.

154 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 7 : Sources of Money Stock (M₃)

No. 7: Sources of Money Stock (M3)
(₹(₹Crore)
Crore)

Sources Outstanding as on March 31/last reporting Fridays of the month/

reporting Fridays

2022-23 2022 2023

Nov. 18 Oct. 20 Nov. 03 Nov. 17

1 2 3 4 5
1 Net Bank Credit to Government 7165533 6612762 7273206 7424462 7368871

(7384463) (7531995) (7475375)

1.1 RBI’s net credit to Government (1.1.1–1.1.2) 1451126 1226047 1018574 1116503 1102323

1.1.1 Claims on Government 1456169 1423456 1392816 1396206 1391088

1.1.1.1 Central Government 1455377 1417773 1372589 1369425 1373750

1.1.1.2 State Governments 792 5683 20227 26781 17338

1.1.2 Government deposits with RBI 5043 197409 374243 279703 288765

1.1.2.1 Central Government 5001 197366 374200 279661 288722

1.1.2.2 State Governments 42 42 42 42 42

1.2 Other Banks’ Credit to Government 5714407 5386715 6254632 6307959 6266548

(6365889) (6415493) (6373052)

2 Bank Credit to Commercial Sector 14429636 13679367 15587981 15742361 15781445

(16174412) (16326456) (16362044)

2.1 RBI’s credit to commercial sector 26549 14661 5245 5237 5240

2.2 Other banks’ credit to commercial sector 14403087 13664706 15582737 15737124 15776206

(16169167) (16321219) (16356804)

2.2.1 Bank credit by commercial banks 13675235 12947813 14852664 15000431 15040209

(15439094) (15584526) (15620807)

2.2.2 Bank credit by co-operative banks 710187 699569 712806 718676 718659

2.2.3 Investments by commercial and co-operative banks in other securities 17665 17324 17266 18017 17337

(17266) (18017) (17337)

3 Net Foreign Exchange Assets of Banking Sector (3.1 + 3.2) 4911766 4571803 4928957 5019082 5056049

3.1 RBI’s net foreign exchange assets (3.1.1–3.1.2) 4587355 4316211 4686133 4776257 4813224

3.1.1 Gross foreign assets 4587616 4316456 4686386 4776512 4813483

3.1.2 Foreign liabilities 260 246 254 254 259

3.2 Other banks’ net foreign exchange assets 324410 255593 242825 242825 242825

4 Government’s Currency Liabilities to the Public 30285 29212 31649 31939 31939

5 Banking Sector’s Net Non-monetary Liabilities 4193459 3493223 4218729 4402293 4431538

(4782221) (4962061) (4990406)

5.1 Net non-monetary liabilities of RBI 1587565 1381545 1472881 1538122 1608680

5.2 Net non-monetary liabilities of other banks (residual) 2605895 2111678 2745849 2864171 2822858

(3309341) (3423939) (3381726)

M₃(1+2+3+4–5) 22343760 21399921 23603064 23815551 23806766

(23737259) (23947411) (23935001)

Note: Figures in parentheses include the impact of merger of a non-bank with a bank.
Figures in parentheses include the impact of merger of a non-bank with bank.

RBI Bulletin January 2024 155

CURRENT STATISTICS

No.No.
8: 8:
Monetary
Monetary Survey
Survey
(₹(₹Crore)
Crore)
Item Outstanding as on March 31/last reporting Fridays of the
month/reporting Fridays

2022-23 2022 2023

Nov. 18 Oct. 20 Nov. 03 Nov. 17

1 2 3 4 5

Monetary Aggregates

NM₁ (1.1+1.2.1+1.3) 5674795 5356388 5668203 5711658 5777315

NM₂ (NM₁ + 1.2.2.1) 13103413 12512151 13655704 13774350 13806036

(13716092) (13833687) (13863742)

NM₃ (NM₂ +1.2.2.2 + 1.4 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 22628165 21732946 24247853 24461719 24462009

(24382048) (24593579) (24590243)

1 Components

1.1 Currency with the Public 3276436 3093618 3201722 3206519 3253867

1.2 Aggregate Deposits of Residents 18828639 18093757 20143542 20347956 20290688

(20277737) (20479816) (20418922)

1.2.1 Demand Deposits 2320598 2192060 2393541 2430862 2449084

1.2.2 Time Deposits of Residents 16508041 15901697 17750001 17917094 17841604

(17884196) (18048954) (17969839)

1.2.2.1 Short-term Time Deposits 7428619 7155763 7987500 8062692 8028722

(8047888) (8122029) (8086427)

1.2.2.1.1 Certificates of Deposits (CDs) 303993 252530 306354 303837 304261

1.2.2.2 Long-term Time Deposits 9079423 8745933 9762500 9854402 9812882

(9836308) (9926925) (9883411)

1.3 'Other' Deposits with RBI 77761 70709 72940 74276 74364

1.4 Call/Term Funding from Financial Institutions 445329 474861 829649 832968 843090

2 Sources

2.1 Domestic Credit 22710730 21384192 23965111 24277666 24267219

(24662798) (24969295) (24954321)

2.1.1 Net Bank Credit to the Government 7165533 6612762 7273206 7424462 7368871

(7384463) (7531995) (7475375)

2.1.1.1 Net RBI credit to the Government 1451126 1226047 1018574 1116503 1102323

2.1.1.2 Credit to the Government by the Banking System 5714407 5386715 6254632 6307959 6266548

(6365889) (6415493) (6373052)

2.1.2 Bank Credit to the Commercial Sector 15545198 14771430 16691905 16853205 16898348

(17278336) (17437300) (17478946)

2.1.2.1 RBI Credit to the Commercial Sector 26549 14661 5245 5237 5240

2.1.2.2 Credit to the Commercial Sector by the Banking System 15518649 14756769 16686661 16847968 16893108

(17273091) (17432063) (17473707)

2.1.2.2.1 Other Investments ( Non-SLR Securities) 1096333 1069274 1089235 1094504 1100497

2.2 Government's Currency Liabilities to the Public 30285 29212 31649 31939 31939

2.3 Net Foreign Exchange Assets of the Banking Sector 4699822 4471445 4695347 4730209 4757422

2.3.1 Net Foreign Exchange Assets of the RBI 4587355 4316211 4686133 4776257 4813224

2.3.2 Net Foreign Currency Assets of the Banking System 112467 155234 9214 -46048 -55802

2.4 Capital Account 3446786 3404236 3873660 3907035 3932436

2.5 Other items (net) 1365887 747667 1134086 1230829 1221003

Note: Figures
Figures in parentheses
in parentheses include
include the impactthe impactofofa merger
of merger ofwith
non-bank a non-bank
a bank. with a bank.

No. 9: Liquidity Aggregates

No. 9: Liquidity Aggregates
(₹ Crore)
(₹ Crore)
Aggregates 2022-23 2022 2023
Nov. Sep. Oct. Nov.
1 2 3 4 5
1 NM₃ 22628165 21732946 24017844 24247853 24462009

(24159840) (24382048) (24590243)

2 Postal Deposits 668887 642280 656356 656356 656356

3 L₁ ( 1 + 2) 23297052 22375226 24674200 24904209 25118365

(24816196) (25038404) (25246599)

4 Liabilities of Financial Institutions 54724 58400 65846 67084 67961

4.1 Term Money Borrowings 1692 1423 1152 1148 1214

4.2 Certificates of Deposit 46407 49270 53260 53260 53910

4.3 Term Deposits 6625 7706 11435 12676 12837

5 L₂ (3 + 4) 23351776 22433625 24740046 24971293 25186325

(24882043) (25105488) (25314560)

6 Public Deposits with Non-Banking Financial Companies 85254 .. 91373 .. ..

7 L₃ (5 + 6) 23437030 .. 24831419 .. ..

Note
Note : 1.: 1.
Figures in theincolumns
Figures might not
the columns add up
might nottoadd
the total
up todue to total
the rounding
dueoff
toof numbers. off of numbers.
rounding
2. Figures in parentheses
2. Figures in parenthesesinclude theimpact
include the impact of merger
of merger of a non-bank
of a non-bank with a bank.
with a bank.

156 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 10: Reserve Bank of India Survey

No. 10: Reserve Bank of India Survey
(₹ Crore)
Item Outstanding as on March 31/last reporting Fridays of the month/
reporting Fridays

2022-23 2022 2023

Nov. 18 Oct. 20 Nov. 3 Nov. 17

1 2 3 4 5
1 Components
1.1 Currency in Circulation 3378521 3218425 3304061 3312891 3355800
1.2 Bankers’ Deposits with the RBI 930477 869931 978509 995508 973005
1.2.1 Scheduled Commercial Banks 868940 814570 917856 934236 910823
1.3 ‘Other’ Deposits with the RBI 77761 70709 72940 74276 74364
Reserve Money (1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 – 2.4 – 2.5) 4386759 4159065 4355510 4382676 4403169
2 Sources
2.1 RBI’s Domestic Credit 1356683 1195188 1110609 1112601 1166686
2.1.1 Net RBI credit to the Government 1451126 1226047 1018574 1116503 1102323

2.1.1.1 Net RBI credit to the Central Government (2.1.1.1.1 +

2.1.1.1.2 + 2.1.1.1.3 + 2.1.1.1.4 – 2.1.1.1.5) 1450376 1220407 998389 1089764 1085027
2.1.1.1.1 Loans and Advances to the Central Government 48677 - - - -
2.1.1.1.2 Investments in Treasury Bills - - - - -
2.1.1.1.3 Investments in dated Government Securities 1406423 1417416 1372232 1369163 1373388
2.1.1.1.3.1 Central Government Securities 1406423 1417416 1372232 1369163 1373388
2.1.1.1.4 Rupee Coins 277 357 357 262 361
2.1.1.1.5 Deposits of the Central Government 5001 197366 374200 279661 288722
2.1.1.2 Net RBI credit to State Governments 749 5641 20185 26738 17295
2.1.2 RBI’s Claims on Banks -120992 -45520 86791 -9139 59123
2.1.2.1 Loans and Advances to Scheduled Commercial Banks -120992 -45520 86791 -9139 59123
2.1.3 RBI’s Credit to Commercial Sector 26549 14661 5245 5237 5240
2.1.3.1 Loans and Advances to Primary Dealers 8476 1801 3181 3181 3181
2.1.3.2 Loans and Advances to NABARD - - - - -
2.2 Government’s Currency Liabilities to the Public 30285 29212 31649 31939 31939
2.3 Net Foreign Exchange Assets of the RBI 4587355 4316211 4686133 4776257 4813224
2.3.1 Gold 371500 326887 377545 384148 383413
2.3.2 Foreign Currency Assets 4215873 3989341 4308605 4392127 4429828
2.4 Capital Account 1505657 1480042 1599957 1629270 1652217
2.5 Other Items (net) 81908 -98496 -127076 -91148 -43537
No. 11: Reserve Money - Components and Sources
No. 11: Reserve Money - Components and Sources
(₹
(₹ Crore)
Crore)
Item Outstanding as on March 31/last Fridays of the month/Fridays
2022-23 2022 2023
Nov. 25 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24
1 2 3 4 5 6 7
Reserve Money
4386759 4146938 4345605 4382676 4421793 4403169 4424556
(1.1 + 1.2 + 1.3 = 2.1 + 2.2 + 2.3 + 2.4 + 2.5 – 2.6)
1 Components
1.1 Currency in Circulation 3378521 3217848 3303821 3312891 3361734 3355800 3355477
1.2 Bankers' Deposits with RBI 930477 864553 967229 995508 984638 973005 994147
1.3 ‘Other’ Deposits with RBI 77761 64537 74556 74276 75421 74364 74932
2 Sources
2.1 Net Reserve Bank Credit to Government 1451126 1194560 966714 1116503 1104071 1102323 1047703
2.2 Reserve Bank Credit to Banks -120992 -30078 98814 -9139 45567 59123 121081
2.3 Reserve Bank Credit to Commercial Sector 26549 20218 5244 5237 5195 5240 5233
2.4 Net Foreign Exchange Assets of RBI 4587355 4336487 4734666 4776257 4776466 4813224 4839414
2.5 Government's Currency Liabilities to the Public 30285 29384 31939 31939 31939 31939 32264
2.6 Net Non- Monetary Liabilities of RBI 1587565 1403634 1491772 1538122 1541445 1608680 1621139

RBI Bulletin January 2024 157

CURRENT STATISTICS

No. 12: Commercial Bank Survey

No. 12: Commercial Bank Survey
(₹Crore)
(₹ Crore)
Item Outstanding as on last reporting Fridays of the month/
reporting Fridays of the month
2022-23 2022 2023
Nov. 18 Oct. 20 Nov. 3 Nov. 17
1 2 3 4 5
1 Components
1.1 Aggregate Deposits of Residents 17882989 17155517 19194041 19393430 19336733
(19328236) (19525290) (19464967)
1.1.1 Demand Deposits 2180431 2050865 2251866 2288742 2307178
1.1.2 Time Deposits of Residents 15702559 15104652 16942176 17104688 17029554
(17076371) (17236548) (17157789)
1.1.2.1 Short-term Time Deposits 7066151 6797093 7623979 7697110 7663299
1.1.2.1.1 Certificates of Deposits (CDs) 303993 252530 306354 303837 304261
1.1.2.2 Long-term Time Deposits 8636407 8307559 9318197 9407578 9366255
1.2 Call/Term Funding from Financial Institutions 445329 474861 829649 832968 843090
2 Sources
2.1 Domestic Credit 20197246 19117789 21899143 22107927 22111776
(22596830) (22799555) (22798878)
2.1.1 Credit to the Government 5414322 5085790 5950559 6004093 5962543
(6061815) (6111627) (6069047)
2.1.2 Credit to the Commercial Sector 14782924 14031999 15948585 16103834 16149233
(16535015) (16687928) (16729831)
2.1.2.1 Bank Credit 13675235 12947813 14852664 15000431 15039956
(15439094) (15584526) (15620554)
2.1.2.1.1 Non-food Credit 13655330 12895573 14832823 14977628 14999695
(15419253) (15561722) (15580294)
2.1.2.2 Net Credit to Primary Dealers 19491 23052 14953 16603 16921
2.1.2.3 Investments in Other Approved Securities 826 822 696 1258 820
2.1.2.4 Other Investments (in non-SLR Securities) 1087371 1060312 1080272 1085541 1091535
2.2 Net Foreign Currency Assets of Commercial Banks (2.2.1-2.2.2-2.2.3) 112467 155234 9214 -46048 -55802
2.2.1 Foreign Currency Assets 351387 367969 307346 259598 246465
2.2.2 Non-resident Foreign Currency Repatriable Fixed Deposits 160924 141837 184860 186800 186810
2.2.3 Overseas Foreign Currency Borrowings 77996 70898 113272 118847 115457
2.3 Net Bank Reserves (2.3.1+2.3.2-2.3.3) 833002 972531 921868 1038081 941534
2.3.1 Balances with the RBI 809907 814570 917856 934236 910823
2.3.2 Cash in Hand 90263 112441 90802 94705 89833
2.3.3 Loans and Advances from the RBI 67168 -45520 86791 -9139 59123
2.4 Capital Account 1916959 1900024 2249532 2253594 2256048
2.5 Other items (net) (2.1+2.2+2.3-2.4-1.1-1.2) 897438 715152 557002 619967 561636
2.5.1 Other Demand and Time Liabilities (net of 2.2.3) 711655 638874 787586 763102 772648
2.5.2 Net Inter-Bank Liabilities (other than to PDs) 44733 17359 171575 162890 158200

Note: Figures in parentheses include the impact of merger of a non-bank with a bank.
Figures in parentheses include the impact of merger of a non-bank with a bank.
No. 13: Scheduled Commercial Banks’ Investments
No. 13: Scheduled Commercial Banks’ Investments
(₹(₹ Crore)
Crore)

Item As on 2022 2023

March 24,
2023 Nov. 18 Oct. 20 Nov. 03 Nov. 17

1 2 3 4 5
1 SLR Securities 5415148 5086612 6053429 6112885 6069868
(5942172) (6005351) (5963364)
2 Other Government Securities (Non-SLR) 182265 172062 179196 179145 179418
3 Commercial Paper 65058 58106 52425 53163 55974
4 Shares issued by
4.1 PSUs 9736 9512 9137 9054 9025
4.2 Private Corporate Sector 71099 70661 82998 82944 83365
4.3 Others 4500 4910 5484 5500 5500
5 Bonds/Debentures issued by
5.1 PSUs 92304 99952 92111 91033 92351
5.2 Private Corporate Sector 325035 324422 293530 291720 291312
5.3 Others 99384 94250 107552 110062 110949
6 Instruments issued by
6.1 Mutual funds 48810 40974 75975 79958 81106
6.2 Financial institutions 189180 185463 183337 182963 182535

Note: 1. Data since July 14, 2023 include the impact of the merger of a non-bank with a bank.
Note: Data against column Nos. (1), (2) & (3) are Final and for column Nos. (4) & (5) data are Provisional.
2. Figures
1. Data since inJuly
parentheses exclude
14, 2023 the impact
include of the merger.
the impact of the merger of a non-bank with a bank.
2. Figures in parentheses exclude the impact of the merger.

158 RBI Bulletin January 2024

 CURRENT STATISTICS

No.No.
14:14: BusinessininIndia
Business India- -All
AllScheduled
Scheduled Banks
Banks and
andAll
AllScheduled
ScheduledCommercial
CommercialBanks
Banks
(₹(₹Crore)
Crore)

Item As on the Last Reporting Friday (in case of March)/ Last Friday

All Scheduled Banks All Scheduled Commercial Banks

2022 2023 2022 2023

2022-23 2022-23
Nov. Oct. Nov. Nov. Oct. Nov.

1 2 3 4 5 6 7 8

Number of Reporting Banks 212 212 210 210 137 137 137 137

1 Liabilities to the Banking System 355252 322059 513463 580351 351843 318826 508338 576160

1.1 Demand and Time Deposits from Banks 228517 200485 235644 299509 226119 197978 232079 296162

1.2 Borrowings from Banks 67566 67257 204553 208377 67199 67114 203787 208262

1.3 Other Demand and Time Liabilities 59170 54317 73267 72465 58524 53734 72472 71735

2 Liabilities to Others 19730504 18946352 21715840 22045273 19278894 18508511 21267483 21597261

2.1 Aggregate Deposits 18477677 17749945 19992340 20223504 18043914 17329371 19560877 19791862
(19859128) (20096435) (19427665) (19664793)

2.1.1 Demand 2225416 2123876 2338952 2437433 2180431 2078973 2293187 2391662

2.1.2 Time 16252261 15626069 17653388 17786071 15863483 15250398 17267690 17400201

2.2 Borrowings 449945 500784 842859 897811 445329 495442 837715 893404

2.3 Other Demand and Time Liabilities 802881 695623 880641 923957 789651 683697 868891 911995

3 Borrowings from Reserve Bank 165085 96704 160738 207355 165085 96669 160738 207355

3.1 Against Usance Bills /Promissory Notes - - - - - - - -

3.2 Others 165085 96704 160738 207355 165085 96669 160738 207355
4 Cash in Hand and Balances with Reserve Bank 920953 936542 1024881 1044258 900170 915324 1003049 1022095
4.1 Cash in Hand 92788 109526 98703 92836 90263 106483 96056 90354
4.2 Balances with Reserve Bank 828165 827015 926178 951421 809907 808841 906993 931741
5 Assets with the Banking System 397974 375572 408298 451879 326601 317123 353220 392008
5.1 Balances with Other Banks 232378 240469 222223 264157 193422 199953 182491 222542
5.1.1 In Current Account 18939 38399 11658 26236 15528 35353 8952 23574
5.1.2 In Other Accounts 213440 202070 210565 237922 177894 164599 173540 198969
5.2 Money at Call and Short Notice 49763 25749 38379 40804 24864 11935 26277 25361
5.3 Advances to Banks 45330 46031 52436 51793 41184 45530 51793 51217
5.4 Other Assets 70503 63324 95260 95124 67130 59706 92659 92888
6 Investment 5560664 5217161 6173361 6121207 5415148 5072239 6024145 5971730
(6064025) (6014836) (5914808) (5865359)
6.1 Government Securities 5553702 5210634 6167013 6114549 5414322 5071422 6023428 5970890
6.2 Other Approved Securities 6963 6527 6348 6657 826 817 717 840
7 Bank Credit 14078261 13386156 15890756 16159743 13675235 13002265 15488344 15751806
(15305241) (15580004) (14902828) (15172066)
7a Food Credit 65622 100376 69256 96147 19906 54657 20829 44182
7.1 Loans, Cash-credits and Overdrafts 13824693 13152140 15619626 15887422 13424906 12771064 15220100 15482411
7.2 Inland Bills-Purchased 39446 33936 46713 47263 39435 33918 46701 47254
7.3 Inland Bills-Discounted 165428 155857 184831 185727 162910 153738 182597 183414
7.4 Foreign Bills-Purchased 19758 16315 16327 16384 19545 16148 16096 16157
7.5 Foreign Bills-Discounted 28936 27908 23259 22947 28439 27397 22849 22569
Note: 1. Data since July 2023 include the impact of the merger of a non-bank with a bank.
Note:2.
Data in column
Figures Nos. (4) & (8)
in parentheses are Provisional
exclude the impact of the merger.
1. Data since July 2023 include the impact of the merger of a non-bank with a bank.
2. Figures in parentheses exclude the impact of the merger.
RBI Bulletin January 2024 159
CURRENT STATISTICS

No.No.
15:15: Deploymentof
Deployment of Gross
Gross Bank
BankCredit
CreditbybyMajor
MajorSectors
Sectors
(₹ (₹Crore)
Crore)

Outstanding as on Growth (Per cent)

Mar. 24, Financial

2023 2022 2023 Y-o-Y
Sector year so far

Nov. 18 Oct. 20 Nov. 17 2023-24 2023

1 2 3 4 % %

I. Bank Credit (II + III) 13675235 12947813 15425809 15620554 14.2 20.6
(14839378) (15039956) (10.0) (16.2)
II. Food Credit 19906 52240 19841 40261 102.3 -22.9
III. Non-food Credit 13655330 12895573 15405968 15580294 14.1 20.8
(14819537) (14999695) (9.8) (16.3)
1. Agriculture & Allied Activities 1728063 1633889 1913176 1931215 11.8 18.2
2. Industry (Micro and Small, Medium and Large) 3416353 3377666 3572336 3600876 5.4 6.6
(3554596) (3583164) (4.9) (6.1)
2.1 Micro and Small 633587 588395 683272 689502 8.8 17.2
2.2 Medium 268557 253286 280782 283774 5.7 12.0
2.3 Large 2514209 2535984 2608282 2627599 4.5 3.6
3. Services 3699716 3400484 4210925 4264761 15.3 25.4
(4090350) (4145875) (12.1) (21.9)
3.1 Transport Operators 192323 175995 215248 218897 13.8 24.4
3.2 Computer Software 24927 24202 25496 26444 6.1 9.3
3.3 Tourism, Hotels & Restaurants 69462 68161 76413 76966 10.8 12.9
3.4 Shipping 7074 7537 6628 6727 -4.9 -10.8
3.5 Aviation 28348 24452 40129 40449 42.7 65.4
3.6 Professional Services 139584 128748 154091 155924 11.7 21.1
3.7 Trade 853417 765259 925451 910846 6.7 19.0
3.7.1. Wholesale Trade¹ 422630 377936 464535 457385 8.2 21.0
3.7.2 Retail Trade 430788 387322 460916 453462 5.3 17.1
3.8 Commercial Real Estate 322573 311766 424139 428720 32.9 37.5
(356561) (362185) (12.3) (16.2)
3.9 Non-Banking Financial Companies (NBFCs)² of which, 1342070 1229247 1476249 1493751 11.3 21.5
3.9.1 Housing Finance Companies (HFCs) 318729 311895 322128 304460 -4.5 -2.4
3.9.2 Public Financial Institutions (PFIs) 175714 178124 190547 190672 8.5 7.0
3.10 Other Services³ 719936 665119 867081 906037 25.8 36.2
(828940) (868549) (20.6) (30.6)
4. Personal Loans 4180838 3888118 4999349 5056524 20.9 30.1
(4551584) (4612590) (10.3) (18.6)
4.1 Consumer Durables 20983 21303 22205 23595 12.4 10.8
4.2 Housing 1988532 1894040 2564666 2594106 30.5 37.0
(2144376) (2177221) (9.5) (15.0)
4.3 Advances against Fixed Deposits 122116 96421 113973 112983 -7.5 17.2
4.4 Advances to Individuals against share & bonds 7634 7529 7872 7834 2.6 4.0
4.5 Credit Card Outstanding 204708 182320 240656 244689 19.5 34.2
4.6 Education 96853 91075 110715 111868 15.5 22.8
4.7 Vehicle Loans 502377 467706 553154 564785 12.4 20.8
4.8 Loan against gold jewellery 89382 84593 100004 100279 12.2 18.5
4.9 Other Personal Loans 1148253 1043132 1286104 1296385 12.9 24.3
(1259170) (1269843) (10.6) (21.7)
5. Priority Sector (Memo)
(i) Agriculture & Allied Activities⁴ 1746051 1666619 1938118 1960408 12.3 17.6
(ii) Micro & Small Enterprises⁵ 1645484 1523695 1853628 1876492 14.0 23.2
(iii) Medium Enterprises⁶ 423888 393265 461620 460435 8.6 17.1
(iv) Housing 622799 614869 742535 740319 18.9 20.4
(642678) (641255) (3.0) (4.3)
(v) Education Loans 59513 58893 61543 61559 3.4 4.5
(vi) Renewable Energy 4670 4192 4810 4677 0.1 11.6
(vii) Social Infrastructure 2464 2394 2610 2597 5.4 8.5
(viii) Export Credit 19725 19755 8016 12308 -37.6 -37.7
(ix) Others 60835 51131 59553 48865 -19.7 -4.4
(x) Weaker Sections including net PSLC- SF/MF 1411633 1350605 1554764 1530814 8.4 13.3

Notes:
(1) Data are provisional. Bank credit, Food credit and Non-food credit data are based on Section-42 return, which covers all scheduled commercial banks (SCBs), while sectoral non-food
credit data are based on sector-wise and industry-wise bank credit (SIBC) return, which covers select banks accounting for about 95 per cent of total non-food credit extended by all SCBs,
pertaining to the last reporting Friday of the month.
(2) Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the merger.
1 Wholesale trade includes food procurement credit outside the food credit consortium.
2 NBFCs include HFCs, PFIs, Microfinance Institutions (MFIs), NBFCs engaged in gold loan and others.
3 “Other Services” include Mutual Fund (MFs), Banking and Finance other than NBFCs and MFs and other services which are not indicated elsewhere under services.
4 “Agriculture and Allied Activities” under the priority sector also include priority sector lending certificates (PSLCs).
5 “Micro and Small Enterprises” under the priority sector include credit to micro and small enterprises in industry and services sectors and also include PSLCs.
6 “Medium Enterprises” under the priority sector include credit to medium enterprises in industry and services sectors.

160 RBI Bulletin January 2024

 CURRENT STATISTICS
No. 16: Industry-wise Deployment of Gross Bank Credit
No. 16: Industry-wise Deployment of Gross Bank Credit
(₹ Crore)
(₹ Crore)
Outstanding as on Growth (Per cent)
Financial
2022 2023 Y-o-Y
Mar. 24, year so far
Industry
2023
Nov. 18 Oct. 20 Nov. 17 2023-24 2023
1 2 3 4 % %
2 Industries (2.1 to 2.19) 3416353 3377666
3572336 3600876 5.4 6.6
(3554596) (3583164) (4.9) (6.1)
2.1 Mining & Quarrying (incl. Coal) 60978 54448 54958 54564 -10.5 0.2
2.2 Food Processing 185709 162097 177320 180389 -2.9 11.3
2.2.1 Sugar 22934 16921 15035 14036 -38.8 -17.1
2.2.2 Edible Oils & Vanaspati 19850 16936 19090 20597 3.8 21.6
2.2.3 Tea 5219 6056 6122 6055 16.0 0.0
2.2.4 Others 137706 122184 137073 139701 1.4 14.3
2.3 Beverage & Tobacco 23975 20569 26489 27487 14.6 33.6
2.4 Textiles 236374 219797 249192 251928 6.6 14.6
2.4.1 Cotton Textiles 93054 83691 97032 98857 6.2 18.1
2.4.2 Jute Textiles 4044 3855 4430 4166 3.0 8.1
2.4.3 Man-Made Textiles 40909 39160 44473 45038 10.1 15.0
2.4.4 Other Textiles 98366 93090 103258 103867 5.6 11.6
2.5 Leather & Leather Products 12086 11728 12386 12239 1.3 4.4
2.6 Wood & Wood Products 21370 19025 22767 22925 7.3 20.5
2.7 Paper & Paper Products 45223 43652 46375 46451 2.7 6.4
2.8 Petroleum, Coal Products & Nuclear Fuels 149962 148759 122055 136192 -9.2 -8.4
2.9 Chemicals & Chemical Products 225174 225010 232379 238082 5.7 5.8
2.9.1 Fertiliser 34680 34865 30666 32540 -6.2 -6.7
2.9.2 Drugs & Pharmaceuticals 71058 70035 77925 78279 10.2 11.8
2.9.3 Petro Chemicals 20844 23268 19531 20327 -2.5 -12.6
2.9.4 Others 98592 96843 104256 106936 8.5 10.4
2.10 Rubber, Plastic & their Products 84522 81573 87032 87757 3.8 7.6
2.11 Glass & Glassware 9583 8065 11022 10985 14.6 36.2
2.12 Cement & Cement Products 58244 53235 61683 62105 6.6 16.7
2.13 Basic Metal & Metal Product 352218 320072 373289 376757 7.0 17.7
2.13.1 Iron & Steel 235399 217858 253805 258043 9.6 18.4
2.13.2 Other Metal & Metal Product 116819 102213 119484 118714 1.6 16.1
2.14 All Engineering 182500 177107 196101 193916 6.3 9.5
2.14.1 Electronics 43563 41692 46835 46034 5.7 10.4
2.14.2 Others 138938 135415 149266 147882 6.4 9.2
2.15 Vehicles, Vehicle Parts & Transport Equipment 103029 99948 111540 110459 7.2 10.5
2.16 Gems & Jewellery 81201 78182 98292 92255 13.6 18.0
2.17 Construction 127186 123228 132648 131412 3.3 6.6
2.18 Infrastructure 1212238 1253456 1267134 1280368 5.6 2.1
2.18.1 Power 623918 635077 622002 632277 1.3 -0.4
2.18.2 Telecommunications 111600 129226 141356 145824 30.7 12.8
2.18.3 Roads 288216 287501 306776 305966 6.2 6.4
2.18.4 Airports 9579 9144 7957 7984 -16.6 -12.7
2.18.5 Ports 8197 8205 7558 7377 -10.0 -10.1
2.18.6 Railways 11255 11378 12782 12864 14.3 13.1
2.18.7 Other Infrastructure 159472 172924 168702 168077 5.4 -2.8
2.19 Other Industries 244781 277716 289674 284603 16.3 2.5
Note: Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the
merger.
Note: (1) Data since July 28, 2023 include the impact of the merger of a non-bank with a bank. Figures in parentheses exclude the impact of the merger.

RBI Bulletin January 2024 161

CURRENT STATISTICS

No. 17: State Co-operative Banks Maintaining Accounts with the Reserve Bank of India
No. 17: State Co-operative Banks Maintaining Accounts with the Reserve Bank of India
(₹ Crore)
(₹ Crore)
Last Reporting Friday (in case of March)/Last Friday/
Item
Reporting Friday

2022 2023
2022-23
Oct. 28 Aug. 25 Sep. 08 Sep. 22 Sep. 29 Oct. 06 Oct. 20 Oct. 27

1 2 3 4 5 6 7 8 9
Number of Reporting Banks 33 33 33 33 33 33 33 33 33
1 Aggregate Deposits (2.1.1.2+2.2.1.2) 144701.9 126637.1 139938.2 139735.9 140020.2 139499.8 138578.6 136984.9 136454.8
2 Demand and Time Liabilities
2.1 Demand Liabilities 30241.2 25889.7 26773.3 27707.4 27511.8 30578.4 26948.5 27395.9 27401.2
2.1.1 Deposits
2.1.1.1 Inter-Bank 6893.3 6211.1 6615.2 6920.0 6776.7 7067.1 6506.7 6285.6 6210.8
2.1.1.2 Others 18195.4 14276.2 14594.4 14691.9 14761.8 16389.1 15182.8 14773.0 14768.0
2.1.2 Borrowings from Banks 0.0 399.7 25.0 1254.6
2.1.3 Other Demand Liabilities 5152.4 5002.6 5563.7 6095.5 5973.3 7122.2 5259.0 6312.3 5167.8
2.2 Time Liabilities 194129.9 171886.4 182044.5 181294.8 180651.5 179527.1 179975.2 174370.9 173252.2
2.2.1 Deposits
2.2.1.1 Inter-Bank 65875.0 55727.0 53971.0 52770.3 52902.3 53493.1 53397.6 49982.8 49258.2
2.2.1.2 Others 126506.5 112360.9 125343.8 125044.0 125258.4 123110.7 123395.8 122211.9 121686.8
2.2.2 Borrowings from Banks 845.8 1441.3 1584.5 2337.5 1315.5 1364.0 1427.2 819.7 889.7
2.2.3 Other Time Liabilities 902.6 2357.3 1145.2 1143.0 1175.3 1559.3 1754.6 1356.5 1417.5
3 Borrowing from Reserve Bank 0.0 35.0
4 Borrowings from a notified bank / Government 84382.5 76583.1 68594.1 67150.0 69571.9 71616.1 73237.4 74442.8 74228.2
4.1 Demand 20545.9 15999.9 18516.2 18454.2 18402.6 18837.6 18837.6 19540.1 19329.5
4.2 Time 63836.7 60583.2 50077.9 48695.8 51169.3 52778.5 54399.8 54902.7 54898.7
5 Cash in Hand and Balances with Reserve Bank 12386.8 10490.1 11838.9 11915.6 11621.1 12007.1 11817.2 11443.3 11176.0
5.1 Cash in Hand 1540.1 814.7 664.1 790.5 728.2 709.5 807.5 703.4 992.9
5.2 Balance with Reserve Bank 10846.7 9675.4 11174.8 11125.1 10892.9 11297.6 11009.7 10739.9 10183.1
6 Balances with Other Banks in Current Account 3500.7 1407.8 1475.4 1753.8 1727.7 2034.4 2153.1 1739.3 1685.7
7 Investments in Government Securities 80906.4 74182.9 71649.5 72671.3 71795.8 72473.9 72645.8 73642.9 73744.2
8 Money at Call and Short Notice 34771.6 21439.7 21285.0 29774.6 23652.0 22621.2 20713.3 19907.6 16653.1
9 Bank Credit (10.1+11) 124978.1 120927.0 125245.6 123133.3 119974.3 119241.1 120828.6 122898.6 123771.7
10 Advances
10.1 Loans, Cash-Credits and Overdrafts 124928.2 120906.9 125169.9 123053.4 119921.6 119187.8 120774.0 122842.1 123727.6
10.2 Due from Banks 131095.9 117333.9 116627.8 116831.8 109260.6 119129.5 120984.0 121532.4 122092.6
11 Bills Purchased and Discounted 49.9 20.1 75.7 79.9 52.7 53.3 54.6 56.5 44.1

162 RBI Bulletin January 2024

 CURRENT STATISTICS

Prices and ProductionNo. 18: Consumer Price Index (Base: 2012=100)

No. 18: Consumer Price Index (Base: 2012=100)
Group/Sub group 2022-23 Rural Urban Combined

Rural Urban Combined Dec.22 Nov.23 Dec.23 (P) Dec.22 Nov.23 Dec.23 (P) Dec.22 Nov.23 Dec.23 (P)

1 2 3 4 5 6 7 8 9 10 11 12

1 Food and beverages 173.9 179.7 176.0 174.4 190.2 188.8 178.6 196.6 195.3 175.9 192.6 191.2

1.1 Cereals and products 163.3 165.3 164.0 168.8 184.8 186.2 170.2 184.2 185.6 169.2 184.6 186.0

1.2 Meat and fish 208.7 215.2 211.0 206.9 210.9 208.1 212.9 219.6 217.5 209.0 214.0 211.4

1.3 Egg 174.7 177.1 175.6 189.1 190.4 197.1 191.9 194.8 200.8 190.2 192.1 198.5

1.4 Milk and products 170.1 170.7 170.3 173.4 182.2 182.3 173.9 182.3 182.5 173.6 182.2 182.4

1.5 Oils and fats 197.0 181.1 191.2 193.9 162.6 162.4 179.1 156.7 156.7 188.5 160.4 160.3

1.6 Fruits 164.1 169.6 166.7 156.7 174.6 172.7 159.5 182.7 178.9 158.0 178.4 175.6

1.7 Vegetables 160.8 198.7 173.6 150.2 199.9 188.4 178.7 246.0 234.7 159.9 215.5 204.1

1.8 Pulses and products 168.1 168.2 168.2 170.5 202.9 204.2 171.3 209.3 210.1 170.8 205.1 206.2

1.9 Sugar and confectionery 119.9 122.2 120.7 121.2 129.7 130.1 123.1 130.9 131.4 121.8 130.1 130.5

1.10 Spices 199.4 193.5 197.5 207.5 249.8 249.1 200.5 239.7 238.7 205.2 246.4 245.6

1.11 Non-alcoholic beverages 175.4 161.3 169.6 176.8 181.8 182.0 162.8 169.0 169.2 171.0 176.5 176.7

1.12 Prepared meals, snacks, sweets 185.1 190.4 187.6 187.7 193.7 194.3 193.3 201.8 202.4 190.3 197.5 198.1

2 Pan, tobacco and intoxicants 195.0 199.9 196.3 195.9 202.9 203.1 201.1 208.5 208.4 197.3 204.4 204.5

3 Clothing and footwear 184.5 172.9 179.9 187.8 193.7 194.2 175.7 182.4 182.7 183.0 189.2 189.6

3.1 Clothing 184.8 175.0 180.9 188.1 194.4 194.8 177.7 184.5 184.8 184.0 190.5 190.9

3.2 Footwear 182.7 161.4 173.9 185.9 189.8 190.3 164.5 171.0 171.2 177.0 182.0 182.4

4 Housing -- 170.0 170.0 -- -- -- 170.7 177.9 176.9 170.7 177.9 176.9

5 Fuel and light 179.7 178.4 179.2 182.8 182.4 183.1 180.6 175.8 175.4 182.0 179.9 180.2

6 Miscellaneous 173.8 166.5 170.3 175.5 182.5 183.0 168.2 174.4 174.8 172.0 178.6 179.0

6.1 Household goods and services 173.7 165.1 169.6 176.4 182.0 182.5 167.3 172.3 172.7 172.1 177.4 177.9

6.2 Health 181.3 174.6 178.7 183.5 191.9 192.5 177.2 186.2 186.8 181.1 189.7 190.3

6.3 Transport and communication 167.3 158.8 162.8 167.8 171.7 171.8 159.4 161.7 161.9 163.4 166.4 166.6

6.4 Recreation and amusement 170.0 165.8 167.6 171.2 176.4 177.0 167.1 171.8 171.9 168.9 173.8 174.1

6.5 Education 175.6 169.7 172.2 177.3 185.2 185.3 171.8 180.4 180.3 174.1 182.4 182.4

6.6 Personal care and effects 173.2 173.4 173.3 175.7 186.7 188.1 176.0 187.9 189.4 175.8 187.2 188.6

General Index (All Groups) 175.8 173.5 174.7 177.1 188.2 187.6 174.1 184.2 183.6 175.7 186.3 185.7

Source: National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India.
P: Provisional

No. 19: Other Consumer Price Indices

No. 19: Other Consumer Price Indices
Item Base Year Linking 2022-23 2022 2023
Factor Nov. Oct. Nov.
1 2 3 4 5 6
1 Consumer Price Index for Industrial Workers 2016 2.88 131.1 132.5 138.4 139.1

2 Consumer Price Index for Agricultural Labourers 1986-87 5.89 1148 1167 1241 1253

3 Consumer Price Index for Rural Labourers 1986-87 - 1160 1178 1251 1262

Source: Labour Bureau, Ministry of Labour and Employment, Government of India.

No. 20: Monthly Average Price of Gold and Silver in Mumbai
No. 20: Monthly Average Price of Gold and Silver in Mumbai

Item 2022 2023

2022-23
Nov. Oct. Nov.
1 2 3 4
1 Standard Gold (₹ per 10 grams) 52731 51874 58773 60786
2 Silver (₹ per kilogram) 61991 60968 70084 72222

Source: India Bullion & Jewellers Association Ltd., Mumbai for Gold and Silver prices in Mumbai.

RBI Bulletin January 2024 163

CURRENT STATISTICS

No. 21: Wholesale Price Index

(Base: 2011-12 = 100)

Commodities Weight 2022-23 2022 2023

Dec. Oct. Nov. (P) Dec. (P)

1 2 3 4 5 6
1 ALL COMMODITIES 100.000 152.5 150.5 152.5 152.9 151.6
1.1 PRIMARY ARTICLES 22.618 176.8 172.9 185.3 186.9 182.9
1.1.1 FOOD ARTICLES 15.256 179.5 174.9 192.0 195.8 191.3
1.1.1.1 Food Grains (Cereals+Pulses) 3.462 178.6 184.4 197.4 199.6 199.8
1.1.1.2 Fruits & Vegetables 3.475 200.6 173.1 204.9 225.2 202.0
1.1.1.3 Milk 4.440 167.8 169.9 180.2 180.6 181.7
1.1.1.4 Eggs,Meat & Fish 2.402 170.6 167.0 171.9 169.2 165.6
1.1.1.5 Condiments & Spices 0.529 187.2 191.5 250.7 246.0 248.4
1.1.1.6 Other Food Articles 0.948 178.1 181.3 199.0 185.4 198.3
1.1.2 NON-FOOD ARTICLES 4.119 172.1 171.2 164.1 163.4 163.1
1.1.2.1 Fibres 0.839 203.0 188.6 167.1 166.8 162.1
1.1.2.2 Oil Seeds 1.115 205.2 199.7 181.8 185.4 185.1
1.1.2.3 Other non-food Articles 1.960 131.2 135.4 138.8 134.8 134.3
1.1.2.4 Floriculture 0.204 257.4 288.6 298.9 304.7 323.7
1.1.3 MINERALS 0.833 203.5 203.9 219.7 219.9 215.7
1.1.3.1 Metallic Minerals 0.648 191.7 190.2 202.7 202.7 205.8
1.1.3.2 Other Minerals 0.185 245.2 252.0 279.3 279.8 250.4
1.1.4 CRUDE PETROLEUM & NATURAL GAS 2.410 158.4 152.4 167.0 159.0 152.2
1.2 FUEL & POWER 13.152 159.5 158.0 155.5 155.3 154.2
1.2.1 COAL 2.138 133.3 134.3 136.7 136.7 136.7
1.2.1.1 Coking Coal 0.647 143.4 143.4 143.4 143.4 143.4
1.2.1.2 Non-Coking Coal 1.401 119.8 119.8 125.8 125.8 125.8
1.2.1.3 Lignite 0.090 271.1 294.3 258.1 258.1 258.1
1.2.2 MINERAL OILS 7.950 172.9 164.4 165.6 162.5 160.0
1.2.3 ELECTRICITY 3.064 143.3 157.7 142.5 149.5 151.5
1.3 MANUFACTURED PRODUCTS 64.231 142.6 141.1 140.4 140.4 140.1
1.3.1 MANUFACTURE OF FOOD PRODUCTS 9.122 165.3 163.6 160.8 161.9 161.0
1.3.1.1 Processing and Preserving of meat 0.134 143.7 144.6 143.9 144.5 144.5
1.3.1.2 Processing and Preserving of fish, Crustaceans, Molluscs 0.204 144.9 146.6 143.7 146.5 145.5
and products thereof
1.3.1.3 Processing and Preserving of fruit and Vegetables 0.138 125.8 127.5 130.6 130.6 131.7
1.3.1.4 Vegetable and Animal oils and Fats 2.643 181.9 168.7 141.4 142.5 141.1
1.3.1.5 Dairy products 1.165 167.0 170.7 180.3 179.5 179.7
1.3.1.6 Grain mill products 2.010 162.1 168.3 178.2 179.7 179.5
1.3.1.7 Starches and Starch products 0.110 158.9 158.5 154.5 157.2 161.1
1.3.1.8 Bakery products 0.215 163.0 166.6 165.1 165.5 165.9
1.3.1.9 Sugar, Molasses & honey 1.163 126.8 127.9 136.7 140.0 138.1
1.3.1.10 Cocoa, Chocolate and Sugar confectionery 0.175 135.9 138.8 138.7 140.6 141.1
1.3.1.11 Macaroni, Noodles, Couscous and Similar farinaceous 0.026 155.8 148.7 150.6 155.1 150.9
products
1.3.1.12 Tea & Coffee products 0.371 178.2 172.8 182.3 180.0 173.6
1.3.1.13 Processed condiments & salt 0.163 176.5 181.6 191.1 198.2 198.8
1.3.1.14 Processed ready to eat food 0.024 141.2 140.8 148.6 146.7 147.3
1.3.1.15 Health supplements 0.225 179.4 181.8 180.8 179.9 178.8
1.3.1.16 Prepared animal feeds 0.356 208.8 209.1 211.6 212.4 210.6
1.3.2 MANUFACTURE OF BEVERAGES 0.909 128.9 129.1 131.7 131.7 131.8
1.3.2.1 Wines & spirits 0.408 129.3 131.2 133.9 134.6 134.5
1.3.2.2 Malt liquors and Malt 0.225 134.5 133.8 135.7 135.5 135.7
1.3.2.3 Soft drinks; Production of mineral waters and Other bottled 0.275 123.7 122.3 125.3 124.4 124.7
waters

164 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 21: Wholesale Price Index (Contd.)

(Base: 2011-12 = 100)

Commodities Weight 2022-23 2022 2023

Dec. Oct. Nov. (P) Dec. (P)

1 2 3 4 5 6
1.3.3 MANUFACTURE OF TOBACCO PRODUCTS 0.514 165.3 166.1 174.1 174.2 175.3
1.3.3.1 Tobacco products 0.514 165.3 166.1 174.1 174.2 175.3
1.3.4 MANUFACTURE OF TEXTILES 4.881 142.7 137.6 134.7 134.3 133.6
1.3.4.1 Preparation and Spinning of textile fibres 2.582 133.2 124.3 120.5 120.2 118.7
1.3.4.2 Weaving & Finishing of textiles 1.509 158.9 158.4 156.8 156.2 156.6
1.3.4.3 Knitted and Crocheted fabrics 0.193 129.9 126.2 121.0 118.2 119.1
1.3.4.4 Made-up textile articles, Except apparel 0.299 153.6 153.1 156.6 156.7 156.7
1.3.4.5 Cordage, Rope, Twine and Netting 0.098 156.8 151.7 137.4 136.9 136.8
1.3.4.6 Other textiles 0.201 132.2 131.9 131.0 131.2 130.6
1.3.5 MANUFACTURE OF WEARING APPAREL 0.814 148.7 149.6 152.0 151.6 152.4
1.3.5.1 Manufacture of Wearing Apparel (woven), Except fur 0.593 147.3 148.6 149.5 148.8 149.3
Apparel
1.3.5.2 Knitted and Crocheted apparel 0.221 152.2 152.1 158.6 159.2 160.6
1.3.6 MANUFACTURE OF LEATHER AND RELATED PRODUCTS 0.535 122.2 121.5 124.0 123.5 123.4
1.3.6.1 Tanning and Dressing of leather; Dressing and Dyeing of fur 0.142 105.6 103.4 106.5 105.2 104.4
1.3.6.2 Luggage, HandbAgs, Saddlery and Harness 0.075 141.0 141.0 141.2 141.2 140.9
1.3.6.3 Footwear 0.318 125.2 125.0 127.8 127.5 127.8
1.3.7 MANUFACTURE OF WOOD AND PRODUCTS OF WOOD 0.772 143.2 143.1 147.1 147.6 147.7
AND CORK
1.3.7.1 Saw milling and Planing of wood 0.124 137.6 139.3 137.8 137.5 136.1
1.3.7.2 Veneer sheets; Manufacture of plywood, Laminboard, 0.493 141.8 141.2 147.4 147.9 148.4
Particle board and Other panels and Boards
1.3.7.3 Builder's carpentry and Joinery 0.036 204.0 205.6 201.7 203.3 203.7
1.3.7.4 Wooden containers 0.119 136.7 136.2 139.1 140.4 140.2
1.3.8 MANUFACTURE OF PAPER AND PAPER PRODUCTS 1.113 152.0 148.4 138.5 138.4 138.5
1.3.8.1 Pulp, Paper and Paperboard 0.493 158.4 156.8 145.3 145.4 145.3
1.3.8.2 Corrugated paper and Paperboard and Containers of paper 0.314 148.3 145.2 141.4 140.8 140.7
and Paperboard
1.3.8.3 Other articles of paper and Paperboard 0.306 145.6 138.3 124.8 124.4 125.1
1.3.9 PRINTING AND REPRODUCTION OF RECORDED MEDIA 0.676 172.5 177.7 183.9 183.9 185.4
1.3.9.1 Printing 0.676 172.5 177.7 183.9 183.9 185.4
1.3.10 MANUFACTURE OF CHEMICALS AND CHEMICAL 6.465 145.4 144.0 136.6 136.3 135.8
PRODUCTS
1.3.10.1 Basic chemicals 1.433 159.2 155.4 139.8 139.2 138.5
1.3.10.2 Fertilizers and Nitrogen compounds 1.485 144.8 147.3 142.2 142.9 142.6
1.3.10.3 Plastic and Synthetic rubber in primary form 1.001 143.2 136.4 131.5 129.9 129.7
1.3.10.4 Pesticides and Other agrochemical products 0.454 143.4 143.8 133.0 132.9 132.1
1.3.10.5 Paints, Varnishes and Similar coatings, Printing ink and 0.491 145.0 145.9 144.1 144.7 143.8
Mastics
1.3.10.6 Soap and Detergents, Cleaning and Polishing preparations, 0.612 140.8 142.3 140.0 139.6 138.8
Perfumes and Toilet preparations
1.3.10.7 Other chemical products 0.692 142.1 141.1 133.9 133.0 132.9
1.3.10.8 Man-made fibres 0.296 110.7 105.6 103.2 102.9 102.8
1.3.11 MANUFACTURE OF PHARMACEUTICALS, MEDICINAL 1.993 140.9 141.8 142.9 142.5 143.2
CHEMICAL AND BOTANICAL PRODUCTS
1.3.11.1 Pharmaceuticals, Medicinal chemical and Botanical 1.993 140.9 141.8 142.9 142.5 143.2
products
1.3.12 MANUFACTURE OF RUBBER AND PLASTICS PRODUCTS 2.299 129.7 128.1 127.2 127.0 127.4
1.3.12.1 Rubber Tyres and Tubes; Retreading and Rebuilding of 0.609 111.8 113.3 113.2 113.3 113.7
Rubber Tyres
1.3.12.2 Other Rubber Products 0.272 106.4 105.7 106.8 107.2 107.4
1.3.12.3 Plastics products 1.418 141.8 138.8 137.1 136.6 137.2

RBI Bulletin January 2024 165

CURRENT STATISTICS

No. 21: Wholesale Price Index (Contd.)

(Base: 2011-12 = 100)

Commodities Weight 2022-23 2022 2023

Dec. Oct. Nov. (P) Dec. (P)

1 2 3 4 5 6
1.3.13 MANUFACTURE OF OTHER NON-METALLIC MINERAL 3.202 133.7 134.8 135.6 134.8 135.0
PRODUCTS
1.3.13.1 Glass and Glass products 0.295 158.1 164.1 163.4 163.2 164.2
1.3.13.2 Refractory products 0.223 119.0 118.9 120.0 119.5 118.9
1.3.13.3 Clay Building Materials 0.121 135.3 137.5 130.1 122.0 117.1
1.3.13.4 Other Porcelain and Ceramic Products 0.222 118.0 118.5 122.3 122.6 122.8
1.3.13.5 Cement, Lime and Plaster 1.645 137.2 137.6 138.8 137.9 138.1
1.3.13.6 Articles of Concrete, Cement and Plaster 0.292 134.4 135.1 137.6 137.6 138.5
1.3.13.7 Cutting, Shaping and Finishing of Stone 0.234 125.6 126.9 130.8 132.1 132.5
1.3.13.8 Other Non-Metallic Mineral Products 0.169 105.9 106.6 101.2 99.9 101.8
1.3.14 MANUFACTURE OF BASIC METALS 9.646 148.7 143.2 142.2 141.0 139.5
1.3.14.1 Inputs into steel making 1.411 159.7 150.4 143.3 140.6 136.7
1.3.14.2 Metallic Iron 0.653 165.9 157.6 153.6 151.9 151.1
1.3.14.3 Mild Steel - Semi Finished Steel 1.274 127.0 122.0 120.0 118.5 117.9
1.3.14.4 Mild Steel -Long Products 1.081 149.7 145.5 143.5 143.2 139.7
1.3.14.5 Mild Steel - Flat products 1.144 155.0 143.8 145.1 143.5 141.4
1.3.14.6 Alloy steel other than Stainless Steel- Shapes 0.067 146.9 141.3 139.1 138.9 136.4
1.3.14.7 Stainless Steel - Semi Finished 0.924 151.9 142.5 136.8 134.3 132.3
1.3.14.8 Pipes & tubes 0.205 175.4 171.9 170.8 170.5 171.0
1.3.14.9 Non-ferrous metals incl. precious metals 1.693 145.9 143.2 143.9 143.4 144.0
1.3.14.10 Castings 0.925 130.7 133.3 145.0 145.0 144.5
1.3.14.11 Forgings of steel 0.271 172.4 175.7 173.8 175.1 174.1
1.3.15 MANUFACTURE OF FABRICATED METAL PRODUCTS, 3.155 139.0 138.0 138.9 139.5 138.8
EXCEPT MACHINERY AND EQUIPMENT
1.3.15.1 Structural Metal Products 1.031 132.7 132.4 132.3 133.2 133.1
1.3.15.2 Tanks, Reservoirs and Containers of Metal 0.660 161.1 156.3 157.7 157.8 157.3
1.3.15.3 Steam generators, Except Central Heating Hot Water Boilers 0.145 100.5 101.2 105.3 106.3 105.9
1.3.15.4 Forging, Pressing, Stamping and Roll-Forming of Metal; 0.383 135.2 135.6 143.8 146.0 145.6
Powder Metallurgy
1.3.15.5 Cutlery, Hand Tools and General Hardware 0.208 112.2 113.3 108.6 109.2 100.4
1.3.15.6 Other Fabricated Metal Products 0.728 145.0 144.8 143.8 143.6 143.9
1.3.16 MANUFACTURE OF COMPUTER, ELECTRONIC AND 2.009 116.6 116.7 120.1 119.8 119.9
OPTICAL PRODUCTS
1.3.16.1 Electronic Components 0.402 115.0 113.7 116.0 115.5 114.8
1.3.16.2 Computers and Peripheral Equipment 0.336 135.0 135.0 135.9 135.1 135.1
1.3.16.3 Communication Equipment 0.310 129.4 130.7 137.3 137.3 139.4
1.3.16.4 Consumer Electronics 0.641 99.7 100.2 104.7 104.4 103.9
1.3.16.5 Measuring, Testing, Navigating and Control equipment 0.181 112.8 112.5 114.1 114.3 113.8
1.3.16.6 Watches and Clocks 0.076 151.2 151.3 157.0 157.0 159.2
1.3.16.7 Irradiation, Electromedical and Electrotherapeutic 0.055 108.9 108.0 107.9 107.1 107.1
equipment
1.3.16.8 Optical instruments and Photographic equipment 0.008 100.5 101.8 103.8 103.8 103.6
1.3.17 MANUFACTURE OF ELECTRICAL EQUIPMENT 2.930 128.8 129.5 132.2 131.2 131.6
1.3.17.1 Electric motors, Generators, Transformers and Electricity 1.298 126.3 128.1 132.1 130.3 130.3
distribution and Control apparatus

166 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 21: Wholesale Price Index (Concld.)

(Base: 2011-12 = 100)

Commodities Weight 2022-23 2022 2023

Dec. Oct. Nov. (P) Dec. (P)

1 2 3 4 5 6
1.3.17.2 Batteries and Accumulators 0.236 131.9 131.7 137.7 137.7 139.1
1.3.17.3 Fibre optic cables for data transmission or live transmission 0.133 116.6 119.1 123.5 123.6 127.4
of images
1.3.17.4 Other electronic and Electric wires and Cables 0.428 146.3 144.1 145.4 145.1 145.6
1.3.17.5 Wiring devices, Electric lighting & display equipment 0.263 117.2 117.7 116.3 116.2 117.1
1.3.17.6 Domestic appliances 0.366 134.1 133.7 133.9 134.0 134.0
1.3.17.7 Other electrical equipment 0.206 117.4 119.7 121.4 120.1 119.5
1.3.18 MANUFACTURE OF MACHINERY AND EQUIPMENT 4.789 126.2 126.3 128.9 128.9 129.2
1.3.18.1 Engines and Turbines, Except aircraft, Vehicle and Two 0.638 126.9 125.9 128.6 128.3 128.9
wheeler engines
1.3.18.2 Fluid power equipment 0.162 128.4 129.2 132.3 131.5 132.3
1.3.18.3 Other pumps, Compressors, Taps and Valves 0.552 117.6 117.6 117.0 116.8 117.3
1.3.18.4 Bearings, Gears, Gearing and Driving elements 0.340 124.2 125.1 126.3 126.7 127.4
1.3.18.5 Ovens, Furnaces and Furnace burners 0.008 79.8 81.3 82.4 83.2 84.9
1.3.18.6 Lifting and Handling equipment 0.285 126.3 126.9 128.5 128.3 129.4
1.3.18.7 Office machinery and Equipment 0.006 130.2 130.2 130.2 130.2 130.2
1.3.18.8 Other general-purpose machinery 0.437 143.0 138.6 145.8 145.1 143.0
1.3.18.9 Agricultural and Forestry machinery 0.833 137.2 138.7 142.5 143.1 143.9
1.3.18.10 Metal-forming machinery and Machine tools 0.224 120.5 121.1 122.9 122.9 123.3
1.3.18.11 Machinery for mining, Quarrying and Construction 0.371 84.9 85.5 89.2 88.8 88.6
1.3.18.12 Machinery for food, Beverage and Tobacco processing 0.228 127.7 125.3 124.3 124.2 124.3
1.3.18.13 Machinery for textile, Apparel and Leather production 0.192 130.0 132.4 137.5 137.6 138.1
1.3.18.14 Other special-purpose machinery 0.468 140.6 142.2 144.1 144.7 144.9
1.3.18.15 Renewable electricity generating equipment 0.046 69.2 69.7 71.5 70.9 70.2
1.3.19 MANUFACTURE OF MOTOR VEHICLES, TRAILERS AND 4.969 127.6 128.0 127.7 128.2 128.4
SEMI-TRAILERS
1.3.19.1 Motor vehicles 2.600 126.0 126.0 128.4 129.4 128.9
1.3.19.2 Parts and Accessories for motor vehicles 2.368 129.3 130.1 126.9 126.8 127.9
1.3.20 MANUFACTURE OF OTHER TRANSPORT EQUIPMENT 1.648 137.4 138.2 143.7 143.8 143.7
1.3.20.1 Building of ships and Floating structures 0.117 162.5 163.6 163.7 163.7 163.6
1.3.20.2 Railway locomotives and Rolling stock 0.110 105.5 104.3 109.0 108.9 108.9
1.3.20.3 Motor cycles 1.302 137.6 138.6 145.3 145.4 145.3
1.3.20.4 Bicycles and Invalid carriages 0.117 139.8 139.2 138.5 138.5 138.0
1.3.20.5 Other transport equipment 0.002 152.5 158.2 161.2 163.0 162.9
1.3.21 MANUFACTURE OF FURNITURE 0.727 157.2 157.7 159.5 160.2 160.3
1.3.21.1 Furniture 0.727 157.2 157.7 159.5 160.2 160.3
1.3.22 OTHER MANUFACTURING 1.064 147.7 153.1 153.4 161.3 166.0
1.3.22.1 Jewellery and Related articles 0.996 146.5 152.3 152.8 161.3 166.3
1.3.22.2 Musical instruments 0.001 189.3 182.7 189.4 186.0 179.2
1.3.22.3 Sports goods 0.012 150.5 151.9 155.0 155.2 155.9
1.3.22.4 Games and Toys 0.005 159.0 159.3 158.8 159.7 160.3
1.3.22.5 Medical and Dental instruments and Supplies 0.049 170.4 168.0 163.2 162.2 162.2
2 FOOD INDEX 24.378 174.2 170.7 180.3 183.1 179.9
Source: Office of the Economic Adviser, Ministry of Commerce and Industry, Government of India.

RBI Bulletin January 2024 167

CURRENT STATISTICS

No. 22: Index of Industrial Production (Base:2011-12=100)

No. 22: Index of Industrial Production (Base:2011-12=100)

Industry Weight 2021-22 2022-23 April-November November

2022-23 2023-24 2022 2023
1 2 3 4 5 6 7

General Index 100.00 131.6 138.5 134.7 143.3 137.7 141.0

1 Sectoral Classification
1.1 Mining 14.37 113.3 119.9 110.8 120.9 122.7 131.1
1.2 Manufacturing 77.63 131.0 137.1 133.7 141.5 137.5 139.2
1.3 Electricity 7.99 170.1 185.2 186.9 201.2 166.7 176.3
2 Use-Based Classification
2.1 Primary Goods 34.05 128.0 139.2 134.6 144.3 132.6 143.8
2.2 Capital Goods 8.22 87.1 100.3 96.3 103.5 99.1 98.0
2.3 Intermediate Goods 17.22 142.8 149.4 147.4 154.6 146.3 151.4
2.4 Infrastructure/ Construction Goods 12.34 146.5 160.7 154.1 171.2 161.7 164.1
2.5 Consumer Durables 12.84 112.9 114.5 116.2 116.9 111.9 105.9
Consumer non-durables 15.33 146.6 147.7 141.4 149.3 162.7 156.9

Source : Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India.

Government Accounts and Treasury Bills

No. 23: Union Government Accounts at a Glance

No. 23: Union Government Accounts at a Glance

(Amount in
(₹₹Crore)
Crore)
Financial Year April – November

2023-24 Percentage to Budget

Item (Budget 2023-24 2022-23 Estimates
Estimates) (Actuals) (Actuals)
2023-24 2022-23

1 2 3 4 5

1 Revenue Receipts 2632281 1720120 1423152 65.3 64.6

1.1 Tax Revenue (Net) 2330631 1435755 1224833 61.6 63.3

1.2 Non-Tax Revenue 301650 284365 198319 94.3 73.5

2 Non Debt Capital Receipt 84000 25463 41481 30.3 52.3

2.1 Recovery of Loans 23000 16604 13052 72.2 91.3

2.2 Other Receipts 61000 8859 28429 14.5 43.7

3 Total Receipts (excluding borrowings) (1+2) 2716281 1745583 1464633 64.3 64.1

4 Revenue Expenditure 3502136 2066522 1995674 59.0 62.5

of which :

4.1 Interest Payments 1079971 607963 545199 56.3 58.0

5 Capital Expenditure 1000961 585645 447113 58.5 59.6

6 Total Expenditure (4+5) 4503097 2652167 2442787 58.9 61.9

7 Revenue Deficit (4-1) 869855 346402 572522 39.8 57.8

8 Fiscal Deficit (6-3) 1786816 906584 978154 50.7 58.9

9 Gross Primary Deficit (8-4.1) 706845 298621 432955 42.2 60.1

Source: Controller General of Accounts (CGA), Ministry of Finance, Government of India and Union Budget 2023-24.

168 RBI Bulletin January 2024

 CURRENT STATISTICS
No. 24: Treasury Bills – Ownership Pattern
No. 24: Treasury Bills – Ownership Pattern
Crore)
(₹ Crore)
2022-23 2022 2023
Item
Nov. 25 Oct. 20 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24
1 2 3 4 5 6 7 8
1 91-day
1.1 Banks 6191 8890 12548 10711 8262 10200 7599 7543
1.2 Primary Dealers 20071 23433 18953 21650 22545 20730 21123 23908
1.3 State Governments 8038 45031 26917 20974 18974 18623 18125 21525
1.4 Others 80638 105739 103499 99139 97693 94571 91778 87048
2 182-day
2.1 Banks 53154 66734 74432 78300 82070 91184 84232 78159
2.2 Primary Dealers 97274 53570 101890 91001 84398 74451 76933 77477
2.3 State Governments 2592 27598 15056 13556 12826 12593 12461 11789
2.4 Others 110072 81946 78378 81399 80232 78065 78535 81564
3 364-day
3.1 Banks 101834 94949 82735 82167 86106 90720 89729 92052
3.2 Primary Dealers 146080 183977 181530 187124 185597 186664 184003 183144
3.3 State Governments 48284 45396 47782 48417 48055 48310 44173 44278
3.4 Others 149086 137074 154735 152709 153297 150615 157268 158805
4 14-day Intermediate
4.1 Banks
4.2 Primary Dealers
4.3 State Governments 212758 194863 109284 126331 101634 115363 123123 138029
4.4 Others 926 1582 331 831 808 873 2874 919
Total Treasury Bills
(Excluding 14 day 823313 874336 898455 887147 880055 876726 865960 867292
Intermediate T Bills) #

# 14D intermediate T-Bills are non-marketable unlike 91D, 182D and 364D T-Bills. These bills are ‘intermediate’ by nature as these are liquidated to
replenish shortfall in the daily minimum cash balances of State Governments.
Note: Primary Dealers (PDs) include banks undertaking PD business.

No. 25:No.
Auctions of Treasury
25: Auctions Bills Bills
of Treasury
(Amount
(Amountinin₹₹Crore)
Crore)

Date of Notified Bids Received Bids Accepted Total Cut- Implicit Yield
Auction Amount Total Face Value Total Face Value Issue off at Cut-off Price
Number Number (6+7) Price (per cent)
Competitive Non- Competitive Non- (₹)
Competitive Competitive
1 2 3 4 5 6 7 8 9 10
91-day Treasury Bills
2023-24
Nov. 1 7000 126 20685 3536 55 6964 3536 10500 98.30 6.9325
Nov. 8 7000 134 22764 1441 57 6958 1441 8399 98.30 6.9221
Nov. 15 7000 80 14448 4725 59 6977 4725 11702 98.30 6.9374
Nov. 22 7000 126 32730 5443 51 6957 5443 12400 98.30 6.9474
Nov. 29 7000 109 22843 1534 57 6966 1534 8500 98.29 6.9599
182-day Treasury Bills
2023-24
Nov. 1 8000 153 27653 108 43 7892 108 8000 96.56 7.1376
Nov. 8 8000 150 28731 1039 23 7961 1039 9000 96.58 7.1068
Nov. 15 8000 126 27022 14 25 7986 14 8000 96.58 7.0987
Nov. 22 8000 129 21025 2363 54 7965 2363 10328 96.57 7.1199
Nov. 29 8000 99 15387 339 82 7971 339 8310 96.56 7.1554
364-day Treasury Bills
2023-24
Nov. 1 9000 129 23177 105 44 8979 105 9085 93.34 7.1598
Nov. 8 9000 139 21040 280 73 8975 280 9255 93.35 7.1489
Nov. 15 9000 157 28608 28 31 8989 28 9017 93.36 7.1297
Nov. 22 9000 147 27140 130 66 8978 130 9108 93.34 7.1497
Nov. 29 9000 150 27636 47 71 8963 47 9011 93.35 7.1476

RBI Bulletin January 2024 169

CURRENT STATISTICS

Financial Markets
No 26:
No. 26:Daily
Daily Call MoneyRates
Call Money Rates
(Per cent per annum)
Range of Rates Weighted Average Rates
As on
Borrowings/ Lendings Borrowings/ Lendings
1 2
November 01 ,2023 5.50-6.90 6.77
November 02 ,2023 5.00-6.85 6.71
November 03 ,2023 5.50-6.85 6.71
November 04 ,2023 5.50-6.25 6.11
November 06 ,2023 5.00-6.85 6.76
November 07 ,2023 5.00-6.85 6.76
November 08 ,2023 5.00-6.95 6.79
November 09 ,2023 5.00-6.90 6.77
November 10 ,2023 5.00-6.90 6.79
November 13 ,2023 5.00-6.90 6.78
November 15 ,2023 5.00-6.90 6.79
November 16 ,2023 5.00-6.92 6.79
November 17 ,2023 5.00-7.00 6.77
November 18 ,2023 5.50-6.25 6.14
November 20 ,2023 5.00-6.90 6.79
November 21 ,2023 5.00-6.90 6.79
November 22 ,2023 5.00-7.00 6.81
November 23 ,2023 5.00-7.00 6.79
November 24 ,2023 5.00-6.92 6.81
November 28 ,2023 5.00-6.95 6.81
November 29 ,2023 5.00-6.98 6.81
November 30 ,2023 5.00-6.90 6.78
December 01 ,2023 5.00-6.90 6.75
December 02 ,2023 5.50-6.65 6.18
December 04 ,2023 5.00-6.85 6.74
December 05 ,2023 5.00-6.85 6.72
December 06 ,2023 5.00-6.85 6.70
December 07 ,2023 5.00-6.85 6.70
December 08 ,2023 5.00-6.85 6.71
December 11 ,2023 5.00-6.88 6.77
December 12 ,2023 5.00-6.90 6.76
December 13 ,2023 5.00-6.90 6.78
December 14 ,2023 5.50-6.93 6.76
December 15 ,2023 5.50-6.80 6.72

Note: Includes Notice Money.

170 RBI Bulletin January 2024

 CURRENT STATISTICS

No
No.27 : Certificates
27: of Deposit
Certificates of Deposit

Item 2022 2023

Nov. 18 Oct. 6 Oct. 20 Nov. 3 Nov. 17
1 2 3 4 5
1 Amount Outstanding (₹ Crore) 257555.16 290340.93 313142.07 315823.00 314547.67
1.1 Issued during the fortnight (₹ Crore) 25534.76 26786.27 35271.26 25219.34 17713.85

2 Rate of Interest (per cent) 6.64-7.28 6.83-7.47 6.95-7.70 6.70-7.65 7.09-7.65

No. 28: Commercial Paper

No. 28: Commercial Paper
Item 2022 2023
Nov. 30 Oct. 15 Oct. 31 Nov. 15 Nov. 30
1 2 3 4 5
1 Amount Outstanding (₹ Crore) 362307.65 418804.10 413685.30 417630.65 394967.95
1.1 Reported during the fortnight (₹ Crore) 66918.15 25039.05 50039.65 41107.05 59808.25

2 Rate of Interest (per cent) 6.50-12.01 6.91-16.41 7.00-11.89 7.10-12.00 6.99-14.34

No. 29: Average Daily Turnover in Select Financial Markets

No. 29: Average Daily Turnover in Select Financial Markets

(₹
(₹Crore)
Crore)

Item 2022-23 2022 2023

Nov. 25 Oct. 20 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 24

1 2 3 4 5 6 7 8
1 Call Money 19987 19325 17617 16651 18767 18171 15896 20250
2 Notice Money 2605 192 3646 336 4257 446 5544 176
3 Term Money 612 332 390 935 532 1340 943 1740
4 Triparty Repo 697245 710250 723083 568927 662534 513718 658729 584809
5 Market Repo 504418 489094 604415 483808 581498 465337 591545 518692
6 Repo in Corporate Bond 2085 473 835 1096 1374 4881 5898 879
7 Forex (US $ million) 67793 73613 78484 84618 80287 77039 73070 77712
8 Govt. of India Dated Securities 66200 56440 53654 51094 43851 65964 56165 68976
9 State Govt. Securities 5450 4989 2984 2423 948 1861 1452 962
10 Treasury Bills
10.1 91-Day 4380 5431 2114 4968 3514 948 2858 2209
10.2 182-Day 4480 2761 1572 5373 2980 4224 1484 2001
10.3 364-Day 2900 2061 1998 1837 1247 2204 1696 2543
10.4 Cash Management Bills
11 Total Govt. Securities (8+9+10) 83410 71681 62322 65694 52539 75201 63655 76691
11.1 RBI 660 1994 1222 713 30 356 87 2640

RBI Bulletin January 2024 171

CURRENT STATISTICS

No.30:
No. 30:New
NewCapital
CapitalIssues
IssuesbybyNon-Government
Non-GovernmentPublic
PublicLimited
Limited Companies
Companies

(Amount in ₹ Crore)

Security & Type of Issue 2022-23 2022-23 (Apr.-Nov.) 2023-24 (Apr.-Nov.) * Nov. 2022 Nov. 2023 *
No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount
Issues Issues Issues Issues Issues

1 2 3 4 5 6 7 8 9 10
1 Equity Shares 237 45266 141 35274 210 47838 19 11729 29 11393
1A Premium 218 42408 130 33100 201 45193 19 11012 29 11073
1.1 Public 164 38515 104 31838 164 41339 15 10078 25 11281
1.1.1 Premium 161 37158 101 30748 164 39905 15 9863 25 10982
1.2 Rights 73 6751 37 3436 46 6500 4 1651 4 112
1.2.1 Premium 57 5250 29 2353 37 5289 4 1149 4 91
2 Preference Shares - - - - - - - - - -
2.1 Public - - - - - - - - - -
2.2 Rights - - - - - - - - - -
3 Bonds & Debentures 34 9221 22 6623 26 10918 2 2000 1 264
3.1 Convertible - - - - - - - - - -
3.1.1 Public - - - - - - - - - -
3.1.2 Rights - - - - - - - - - -
3.2 Non-Convertible 34 9221 22 6623 26 10918 2 2000 1 264
3.2.1 Public 34 9221 22 6623 26 10918 2 2000 1 264
3.2.2 Rights - - - - - - - - - -
4 Total (1+2+3) 271 54487 163 41897 236 58756 21 13729 30 11657
4.1 Public 198 47736 126 38461 190 52256 17 12078 26 11545
4.2 Rights 73 6751 37 3436 46 6500 4 1651 4 112
Note : 1. Since April 2020, monthly data on equity issues is compiled on the basis of their listing date.
Note : 2.
1. Since April 2020, monthly data on equity issues is compiled on the basis of their listing date.
Figures in the columns might not add up to the total due to rounding off numbers.
Source 2. Figures in the
: Securities andcolumns
Exchangemight not add
Board up to the total due to rounding off numbers.
of India.
Source : Securities and
* : Data is Provisional. Exchange Board of India.
* : Data is Provisional

172 RBI Bulletin January 2024

 CURRENT STATISTICS

External Sector
No.
No.31:
31:Foreign Trade
Foreign Trade
2022 2023
2022-23
Item Unit Nov. Jul. Aug. Sep. Oct. Nov.
1 2 3 4 5 6 7
1 Exports ₹ Crore 3621550 285413 283501 318059 285958 278768 282157
US $ Million 451070 34887 34509 38420 34433 33492 33873
1.1 Oil ₹ Crore 782303 66154 55069 79734 53582 49233 62155
US $ Million 97468 8086 6703 9631 6452 5915 7462
1.2 Non-oil ₹ Crore 2839247 219259 228432 238325 232376 229535 220002
US $ Million 353602 26801 27806 28788 27981 27577 26411
2 Imports ₹ Crore 5749801 465922 439345 504955 452481 528105 453839
US $ Million 715969 56951 53480 60996 54485 63447 54484
2.1 Oil ₹ Crore 1682475 133505 96951 124097 116178 134426 124413
US $ Million 209418 16319 11801 14990 13989 16150 14936
2.2 Non-oil ₹ Crore 4067326 332417 342394 380858 336303 393678 329426
US $ Million 506551 40633 41678 46005 40495 47297 39548
3 Trade Balance ₹ Crore -2128251 -180509 -155843 -186896 -166523 -249337 -171682
US $ Million -264899 -22064 -18970 -22576 -20051 -29956 -20611
3.1 Oil ₹ Crore -900172 -67351 -41881 -44363 -62596 -85193 -62258
US $ Million -111950 -8233 -5098 -5359 -7537 -10235 -7474
3.2 Non-oil ₹ Crore -1228079 -113158 -113962 -142533 -103926 -164143 -109424
US $ Million -152949 -13832 -13872 -17217 -12514 -19720 -13136

Source: DGCI&S and Ministry of Commerce & Industry.

No 32: Foreign Exchange Reserves
No. 32: Foreign Exchange Reserves

2023
Item Unit
Jan. 06 Nov. 24 Dec. 01 Dec. 08 Dec. 15 Dec. 22 Dec. 29
1 2 3 4 5 6 7
1 Total Reserves ₹ Crore 4645635 4985457 5031468 5060326 5112041 5158895 5185784
US $ Million 561583 597935 604042 606859 615971 620441 623200
1.1 Foreign Currency Assets ₹ Crore 4106795 4406784 4444765 4475303 4523362 4571034 4590152
US $ Million 496441 528531 533610 536699 545048 549747 551615
1.2 Gold ₹ Crore 345658 386360 394231 392998 394838 394739 402148
US $ Million 41784 46338 47329 47130 47577 47474 48328
Volume (Metric Tonnes) 787.37 803.58 803.58 803.58 803.58 803.58 803.58
1.3 SDRs SDRs Million 13662 13688 13688 13688 13688 13688 13688
₹ Crore 150698 151898 152019 151658 152060 152383 152822
US $ Million 18217 18218 18250 18188 18323 18327 18365
1.4 Reserve Tranche Position in IMF ₹ Crore 42485 40415 40452 40368 41782 40739 40662
US $ 33:
No. Million
Non-Resident5141Deposits
4848 4853 4842 5023 4894 4892
* Difference, if any, is due to rounding off.

* Difference, if any, is due to rounding off. No. 33: Non-Resident Deposits

(US $ Million)
Note: Exclude investment in foreign currency denominated bonds issued by IIFC (UK), SDRs transferred by Government of
India to RBI and foreign currency received under SAARC and ACU currency swap arrangements. Foreign currency assets in
Scheme
Outstanding Flows
US dollar take into account appreciation/depreciation of non-US currencies (such as Euro, Sterling, Yen and Australian
Dollar) held in reserves. Foreign exchange holdings are converted into rupees 2023
2022 at rupee-US dollar RBI2022-23
holding rates. 2023-24
2022-23
Nov. Oct. Nov. (P) Apr.-Nov. Apr.-Nov.(P)
1 2 3 4 5 6
1 NRI Deposits 138879 134500 143481 144489 3631 7290
1.1 FCNR(B) 19363 16719 21427 21860 -199 2496
1.2 NR(E)RA 95817 95318 96566 96795 1213 2313
1.3 NRO 23699 22463 25487 25834 2617 2480
P: Provisional.
P: Provisional

RBI Bulletin January 2024 173

CURRENT STATISTICS

No.
No.34:34:
Foreign Investment
Foreign InvestmentInflows
Inflows
(US $ Million)
2022-23 2023-24 2022 2023
Item 2022-23
Apr.-Nov. Apr.-Nov. Nov. Oct. Nov.
1 2 3 4 5 6

1.1 Net Foreign Direct Investment (1.1.1-1.1.2) 27986 19761 13542 -1008 5904 2867

1.1.1 Direct Investment to India (1.1.1.1-1.1.1.2) 42006 29112 21394 1575 7269 3696

1.1.1.1 Gross Inflows/Gross Investments 71355 48990 46979 4507 8373 5064

1.1.1.1.1 Equity 47600 33344 30591 2548 6475 2973

1.1.1.1.1.1 Government (SIA/FIPB) 692 562 224 4 2 31

1.1.1.1.1.2 RBI 37097 25661 19788 2089 2757 1854

1.1.1.1.1.3 Acquisition of shares 8245 6112 9651 319 3578 952

1.1.1.1.1.4 Equity capital of unincorporated bodies 1566 1009 928 137 137 137

1.1.1.1.2 Reinvested earnings 19105 12440 12760 1689 1689 1689

1.1.1.1.3 Other capital 4650 3207 3628 270 210 402

1.1.1.2 Repatriation/Disinvestment 29349 19879 25585 2932 1104 1368

1.1.1.2.1 Equity 27094 18196 23890 2644 1004 1258

1.1.1.2.2 Other capital 2255 1683 1696 288 101 109

1.1.2 Foreign Direct Investment by India
14020 9350 7852 2583 1365 829
(1.1.2.1+1.1.2.2+1.1.2.3-1.1.2.4)
1.1.2.1 Equity capital 8771 5365 4661 1488 903 456

1.1.2.2 Reinvested Earnings 4412 2941 3041 368 368 368

1.1.2.3 Other Capital 4714 3396 2804 1026 221 181

1.1.2.4 Repatriation/Disinvestment 3877 2352 2654 298 127 175

1.2 Net Portfolio Investment (1.2.1+1.2.2+1.2.3-1.2.4) -5152 -2800 22711 4736 -2001 4035

1.2.1 GDRs/ADRs - - - - - -

1.2.2 FIIs -4828 -2521 23405 4705 -1920 3950

1.2.3 Offshore funds and others - - - - - -

1.2.4 Portfolio investment by India 324 279 693 -31 81 -85

1 Foreign Investment Inflows 22834 16962 36253 3728 3903 6902

No. 35: Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals
No. 35: Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals
(US $ Million) (US $ Million)

Item 2022 2023

2022-23
Nov. Sep. Oct. Nov.
1 2 3 4 5
1 Outward Remittances under the LRS 27140.65 1992.70 3492.91 2176.98 1878.67
1.1 Deposit 1011.07 60.72 118.56 26.28 25.19
1.2 Purchase of immovable property 188.73 17.17 29.13 11.02 10.31
1.3 Investment in equity/debt 1256.15 86.58 208.45 83.86 41.30
1.4 Gift 3005.27 220.90 383.70 184.79 181.55
1.5 Donations 12.78 0.98 0.91 0.96 0.54
1.6 Travel 13662.15 1030.64 1765.07 1368.98 1180.42
1.7 Maintenance of close relatives 4174.06 305.35 559.79 206.16 206.63
1.8 Medical Treatment 55.74 4.76 4.85 8.53 8.02
1.9 Studies Abroad 3427.81 211.65 396.08 269.19 207.55
1.10 Others 346.89 53.95 26.37 17.22 17.15

174 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 36: Indices of Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER) of the Indian
No. 36: Indices of Nominal Effective
Rupee Exchange Rate (NEER) and
Real Effective Exchange Rate (REER) of the Indian Rupee

2022 2023
2021-22 2022-23
Dec Nov Dec
Item 1 2 3 4 5

40-Currency Basket (Base: 2015-16=100)

1 Trade-Weighted

1.1 NEER 93.13 91.27 89.28 90.78 90.28

1.2 REER 104.67 102.86 100.44 104.81 103.59

2 Export-Weighted

2.1 NEER 93.55 93.03 91.00 93.20 92.77

2.2 REER 103.48 101.12 98.60 102.23 101.18

6-Currency Basket (Trade-weighted)

1 Base : 2015-16 =100

1.1 NEER 87.04 85.93 83.69 83.61 82.91

1.2 REER 102.12 101.80 99.24 102.99 101.76

2 Base : 2021-22 =100

2.1 NEER 100.00 98.72 96.15 96.05 95.25

2.2 REER 100.00 99.69 97.18 100.85 99.65

RBI Bulletin January 2024 175

CURRENT STATISTICS
No. 37: External Commercial Borrowings (ECBs) – Registrations

No. 37: External Commercial Borrowings (ECBs) – Registrations

(Amount in US $ Million)

Item 2022-23 2022 2023

Nov. Oct. Nov.
1 2 3 4
1 Automatic Route
1.1 Number 1093 92 90 64

1.2 Amount 24156 5203 742 1146

2 Approval Route
2.1 Number 9 0 0 0
2.2 Amount 2473 0 0 0
3 Total (1+2)
3.1 Number 1102 92 90 64
3.2 Amount 26629 5203 742 1146
4 Weighted Average Maturity (in years) 5.72 4.70 13.90 4.50
5 Interest Rate (per cent)
5.1 Weighted Average Margin over alternative reference rate (ARR) for Floating Rate Loans@ 1.68 1.62 1.98 1.61
5.2 Interest rate range for Fixed Rate Loans 0.00-11.80 0.00-11.80 0.00-27.00 0.00-11.80
Borrower Category
I. Corporate Manufacturing 6925 2116 184 502
II. Corporate-Infrastructure 8396 2971 351 163
a.) Transport 333 0 350 120
b.) Energy 2235 1192 0 0
c.) Water and Sanitation 32 14 0 0
d.) Communication 1538 1515 0 0
e.) Social and Commercial Infrastructure 530 0 0 30
f.) Exploration,Mining and Refinery 2085 250 0 5
g.) Other Sub-Sectors 1643 0 1 8
III. Corporate Service-Sector 1773 13 26 87
IV. Other Entities 1805 0 0 0
a.) units in SEZ 6 0 0 0
b.) SIDBI 0 0 0 0
c.) Exim Bank 1800 0 0 0
V. Banks 0 0 0 0
VI. Financial Institution (Other than NBFC ) 0 0 0 0
VII. NBFCs 7540 81 31 379
a). NBFC- IFC/AFC 3031 0 0 103
b). NBFC-MFI 313 31 2 0
c). NBFC-Others 4196 50 29 276
VIII. Non-Government Organization (NGO) 0 0 0 0
IX. Micro Finance Institution (MFI) 0 0 0 0
X. Others 189 22 150 15

Note: Based on applications for ECB/Foreign Currency Convertible Bonds (FCCBs) which have been allotted loan registration number during the period.
@ With effect from July 01, 2023, the benchmark rate is changed to Alternative Reference Rate (ARR)

176 RBI Bulletin January 2024

 CURRENT STATISTICS
No. 38: India’s Overall Balance of Payments

No. 38: India’s Overall Balance of Payments

(US$ Million)

Jul-Sep 2022 Jul-Sep 2023 (P)

Credit Debit Net Credit Debit Net

Item 1 2 3 4 5 6
Overall Balance Of Payments (1+2+3) 375274 405653 -30379 434954 432436 2519
1 Current Account (1.1+ 1.2) 225322 256224 -30902 231599 239918 -8319
1.1 Merchandise 111852 190165 -78313 108468 169502 -61034
1.2 Invisibles (1.2.1+1.2.2+1.2.3) 113470 66059 47411 123131 70416 52715
1.2.1 Services 79981 45555 34426 83362 43411 39950
1.2.1.1 Travel 5775 7539 -1764 7482 8662 -1180
1.2.1.2 Transportation 9529 11337 -1809 7062 7277 -215
1.2.1.3 Insurance 756 586 170 829 821 8
1.2.1.4 G.n.i.e. 183 219 -36 140 244 -104
1.2.1.5 Miscellaneous 63738 25873 37865 67850 26408 41442
1.2.1.5.1 Software Services 36228 3546 32681 39570 4333 35237
1.2.1.5.2 Business Services 19141 13964 5178 21472 13673 7799
1.2.1.5.3 Financial Services 2113 1600 514 2069 1183 887
1.2.1.5.4 Communication Services 803 399 403 887 365 522
1.2.2 Transfers 27462 2688 24773 28145 3193 24952
1.2.2.1 Official 52 269 -217 23 240 -217
1.2.2.2 Private 27410 2419 24991 28123 2954 25169
1.2.3 Income 6027 17816 -11788 11624 23811 -12187
1.2.3.1 Investment Income 4398 16961 -12564 9864 22894 -13030
1.2.3.2 Compensation of Employees 1630 854 775 1760 917 843
2 Capital Account (2.1+2.2+2.3+2.4+2.5) 149953 148492 1461 202511 192518 9994
2.1 Foreign Investment (2.1.1+2.1.2) 99783 87042 12741 128612 123952 4660
2.1.1 Foreign Direct Investment 18104 11895 6209 16626 16913 -287
2.1.1.1 In India 16900 7803 9097 15762 12686 3076
2.1.1.1.1 Equity 10699 7111 3588 9879 12278 -2399
2.1.1.1.2 Reinvested Earnings 4672 0 4672 4815 4815
2.1.1.1.3 Other Capital 1529 692 837 1068 409 660
2.1.1.2 Abroad 1204 4092 -2888 864 4227 -3363
2.1.1.2.1 Equity 1204 1782 -578 864 1489 -626
2.1.1.2.2 Reinvested Earnings 0 1103 -1103 0 1153 -1153
2.1.1.2.3 Other Capital 0 1207 -1207 0 1585 -1585
2.1.2 Portfolio Investment 81678 75146 6532 111986 107040 4947
2.1.2.1 In India 81375 74473 6901 111127 105841 5286
2.1.2.1.1 FIIs 81375 74473 6901 111127 105841 5286
2.1.2.1.1.1 Equity 72212 66210 6003 101529 97937 3593
2.1.2.1.1.2 Debt 9163 8264 899 9598 7905 1693
2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0
2.1.2.2 Abroad 303 673 -370 859 1198 -339
2.2 Loans (2.2.1+2.2.2+2.2.3) 24578 23971 607 27809 26358 1451
2.2.1 External Assistance 2017 1523 494 2600 1774 826
2.2.1.1 By India 8 23 -15 7 23 -16
2.2.1.2 To India 2009 1501 508 2592 1751 842
2.2.2 Commercial Borrowings 5409 5606 -197 7462 10352 -2890
2.2.2.1 By India 359 100 258 2853 3926 -1073
2.2.2.2 To India 5051 5506 -455 4609 6426 -1817
2.2.3 Short Term to India 17152 16842 310 17748 14232 3516
2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 17152 15041 2111 17632 14232 3400
2.2.3.2 Suppliers' Credit up to 180 days 0 1801 -1801 116 0 116
2.3 Banking Capital (2.3.1+2.3.2) 15567 24013 -8447 34020 29686 4333
2.3.1 Commercial Banks 15567 24012 -8445 34020 29614 4405
2.3.1.1 Assets 134 10646 -10512 8673 11210 -2538
2.3.1.2 Liabilities 15433 13366 2067 25347 18404 6943
2.3.1.2.1 Non-Resident Deposits 13993 11504 2490 21257 18048 3209
2.3.2 Others 0 2 -2 0 72 -72
2.4 Rupee Debt Service 0 1 -1 0 1 -1
2.5 Other Capital 10025 13464 -3439 12070 12520 -449
3 Errors & Omissions 0 937 -937 844 0 844
4 Monetary Movements (4.1+ 4.2) 30379 0 30379 0 2519 -2519
4.1 I.M.F. 0 0 0 0 0 0
4.2 Foreign Exchange Reserves (Increase - / Decrease +) 30379 0 30379 0 2519 -2519

Note: P: Preliminary.

RBI Bulletin January 2024 177

CURRENT STATISTICS

No. 39: India's Overall Balance of Payments

No. 39: India’s Overall Balance of Payments
(₹ Crore)
(₹ Crore)

Jul-Sep 2022 Jul-Sep 2023 (P)

Credit Debit Net Credit Debit Net

Item
1 2 3 4 5 6
Overall Balance Of Payments (1+2+3) 2994541 3236952 -242411 3595402 3574583 20819
1 Current Account (1.1+ 1.2) 1797977 2044566 -246589 1914436 1983202 -68765
1.1 Merchandise 892533 1517441 -624907 896615 1401132 -504517
1.2 Invisibles (1.2.1+1.2.2+1.2.3) 905444 527125 378319 1017821 582069 435752
1.2.1 Services 638217 363513 274704 689083 358846 330237
1.2.1.1 Travel 46081 60160 -14079 61845 71601 -9756
1.2.1.2 Transportation 76035 90467 -14432 58377 60151 -1774
1.2.1.3 Insurance 6031 4676 1355 6850 6785 66
1.2.1.4 G.n.i.e. 1463 1751 -288 1154 2018 -863
1.2.1.5 Miscellaneous 508608 206460 302148 560857 218292 342565
1.2.1.5.1 Software Services 289082 28298 260784 327091 35818 291272
1.2.1.5.2 Business Services 152740 111423 41317 177488 113019 64469
1.2.1.5.3 Financial Services 16862 12764 4098 17106 9777 7329
1.2.1.5.4 Communication Services 6405 3185 3219 7334 3015 4319
1.2.2 Transfers 219132 21450 197682 232654 26397 206257
1.2.2.1 Official 413 2145 -1732 189 1981 -1792
1.2.2.2 Private 218719 19305 199414 232466 24416 208049
1.2.3 Income 48094 142162 -94067 96084 196826 -100742
1.2.3.1 Investment Income 35091 135345 -100254 81540 189247 -107707
1.2.3.2 Compensation of Employees 13003 6816 6187 14544 7579 6965
2 Capital Account (2.1+2.2+2.3+2.4+2.5) 1196564 1184907 11657 1673990 1591381 82609
2.1 Foreign Investment (2.1.1+2.1.2) 796226 694559 101667 1063129 1024610 38518
2.1.1 Foreign Direct Investment 144465 94920 49545 137433 139804 -2370
2.1.1.1 In India 134857 62266 72591 130295 104866 25429
2.1.1.1.1 Equity 85372 56743 28629 81661 101488 -19827
2.1.1.1.2 Reinvested Earnings 37283 0 37283 39803 0 39803
2.1.1.1.3 Other Capital 12202 5523 6678 8831 3378 5453
2.1.1.2 Abroad 9608 32654 -23046 7138 34938 -27800
2.1.1.2.1 Equity 9608 14223 -4615 7138 12309 -5171
2.1.1.2.2 Reinvested Earnings 0 8801 -8801 0 9530 -9530
2.1.1.2.3 Other Capital 0 9630 -9630 0 13098 -13098
2.1.2 Portfolio Investment 651761 599639 52122 925695 884807 40889
2.1.2.1 In India 649339 594268 55071 918597 874902 43695
2.1.2.1.1 FIIs 649339 594268 55071 918597 874902 43695
2.1.2.1.1.1 Equity 576224 528326 47898 839257 809559 29698
2.1.2.1.1.2 Debt 73116 65943 7173 79340 65343 13997
2.1.2.1.2 ADR/GDRs 0 0 0 0 0 0
2.1.2.2 Abroad 2422 5371 -2949 7099 9905 -2806
2.2 Loans (2.2.1+2.2.2+2.2.3) 196127 191281 4846 229873 217877 11996
2.2.1 External Assistance 16095 12155 3940 21491 14665 6826
2.2.1.1 By India 63 180 -117 61 192 -131
2.2.1.2 To India 16032 11975 4057 21430 14473 6957
2.2.2 Commercial Borrowings 43165 44735 -1570 61678 85571 -23893
2.2.2.1 By India 2861 799 2062 23582 32453 -8871
2.2.2.2 To India 40304 43936 -3632 38096 53118 -15022
2.2.3 Short Term to India 136866 134391 2475 146704 117640 29063
2.2.3.1 Buyers' credit & Suppliers' Credit >180 days 136866 120023 16843 145745 117640 28105
2.2.3.2 Suppliers' Credit up to 180 days 0 14368 -14368 958 0 958
2.3 Banking Capital (2.3.1+2.3.2) 124217 191617 -67400 281213 245392 35820
2.3.1 Commercial Banks 124217 191604 -67387 281213 244798 36415
2.3.1.1 Assets 1070 84951 -83881 71689 92667 -20978
2.3.1.2 Liabilities 123147 106652 16494 209524 152131 57393
2.3.1.2.1 Non-Resident Deposits 111661 91794 19867 175715 149187 26528
2.3.2 Others 0 13 -13 0 594 -594
2.4 Rupee Debt Service 0 10 -10 0 12 -12
2.5 Other Capital 79995 107440 -27445 99776 103490 -3714
3 Errors & Omissions 0 7480 -7480 6975 0 6975
4 Monetary Movements (4.1+ 4.2) 242411 0 242411 0 20819 -20819
4.1 I.M.F. 0 0 0 0 0 0
4.2 Foreign Exchange Reserves (Increase - / Decrease +) 242411 0 242411 0 20819 -20819
Note: P: Preliminary.

178 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 40: Standard Presentation of BoP in India as per BPM6

No. 40: Standard Presentation of BoP in India as per BPM6
(US$ Million)
Item Jul-Sep 2022 Jul-Sep 2023 (P)
Credit Debit Net Credit Debit Net
1 2 3 4 5 6
1 Current Account (1.A+1.B+1.C) 225318 256203 -30885 231599 239899 -8300
1.A Goods and Services (1.A.a+1.A.b) 191833 235720 -43887 191830 212914 -21084
1.A.a Goods (1.A.a.1 to 1.A.a.3) 111852 190165 -78313 108468 169502 -61034
1.A.a.1 General merchandise on a BOP basis 111538 180388 -68850 107580 156950 -49369
1.A.a.2 Net exports of goods under merchanting 313 0 313 888 0 888
1.A.a.3 Nonmonetary gold 0 9776 -9776 12553 -12553
1.A.b Services (1.A.b.1 to 1.A.b.13) 79981 45555 34426 83362 43411 39950
1.A.b.1 Manufacturing services on physical inputs owned by others 311 28 283 283 39 244
1.A.b.2 Maintenance and repair services n.i.e. 50 542 -492 56 308 -251
1.A.b.3 Transport 9529 11337 -1809 7062 7277 -215
1.A.b.4 Travel 5775 7539 -1764 7482 8662 -1180
1.A.b.5 Construction 858 833 26 954 677 277
1.A.b.6 Insurance and pension services 756 586 170 829 821 8
1.A.b.7 Financial services 2113 1600 514 2069 1183 887
1.A.b.8 Charges for the use of intellectual property n.i.e. 324 2224 -1900 422 3341 -2919
1.A.b.9 Telecommunications, computer, and information services 37111 4140 32971 40546 4968 35578
1.A.b.10 Other business services 19141 13964 5178 21472 13673 7799
1.A.b.11 Personal, cultural, and recreational services 917 1654 -737 1211 2080 -869
1.A.b.12 Government goods and services n.i.e. 183 219 -36 140 244 -104
1.A.b.13 Others n.i.e. 2913 890 2023 836 140 696
1.B Primary Income (1.B.1 to 1.B.3) 6027 17816 -11788 11624 23811 -12187
1.B.1 Compensation of employees 1630 854 775 1760 917 843
1.B.2 Investment income 3559 16855 -13296 8645 22481 -13836
1.B.2.1 Direct investment 2145 9945 -7799 2028 12357 -10328
1.B.2.2 Portfolio investment 55 2917 -2862 84 3657 -3573
1.B.2.3 Other investment 146 3947 -3802 520 6250 -5730
1.B.2.4 Reserve assets 1213 46 1167 6013 217 5796
1.B.3 Other primary income 838 106 732 1219 413 806
1.C Secondary Income (1.C.1+1.C.2) 27458 2667 24791 28145 3174 24971
1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 27410 2419 24991 28123 2954 25169
1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 26686 1750 24935 27335 2040 25296
1.C.1.2 Other current transfers 724 669 55 787 914 -127
1.C.2 General government 48 248 -200 22 220 -198
2 Capital Account (2.1+2.2) 136 119 17 151 199 -48
2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 6 36 -30 9 91 -82
2.2 Capital transfers 130 83 47 142 108 34
3 Financial Account (3.1 to 3.5) 180199 148394 31806 202361 194857 7504
3.1 Direct Investment (3.1A+3.1B) 18104 11895 6209 16626 16913 -287
3.1.A Direct Investment in India 16900 7803 9097 15762 12686 3076
3.1.A.1 Equity and investment fund shares 15371 7111 8260 14694 12278 2417
3.1.A.1.1 Equity other than reinvestment of earnings 10699 7111 3588 9879 12278 -2399
3.1.A.1.2 Reinvestment of earnings 4672 0 4672 4815 4815
3.1.A.2 Debt instruments 1529 692 837 1068 409 660
3.1.A.2.1 Direct investor in direct investment enterprises 1529 692 837 1068 409 660
3.1.B Direct Investment by India 1204 4092 -2888 864 4227 -3363
3.1.B.1 Equity and investment fund shares 1204 2885 -1681 864 2642 -1778
3.1.B.1.1 Equity other than reinvestment of earnings 1204 1782 -578 864 1489 -626
3.1.B.1.2 Reinvestment of earnings 0 1103 -1103 1153 -1153
3.1.B.2 Debt instruments 0 1207 -1207 0 1585 -1585
3.1.B.2.1 Direct investor in direct investment enterprises 0 1207 -1207 1585 -1585
3.2 Portfolio Investment 81678 75146 6532 111986 107040 4947
3.2.A Portfolio Investment in India 81375 74473 6901 111127 105841 5286
3.2.1 Equity and investment fund shares 72212 66210 6003 101529 97937 3593
3.2.2 Debt securities 9163 8264 899 9598 7905 1693
3.2.B Portfolio Investment by India 303 673 -370 859 1198 -339
3.3 Financial derivatives (other than reserves) and employee stock options 7454 7308 145 5476 7362 -1887
3.4 Other investment 42584 54043 -11460 68273 61023 7250
3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0
3.4.2 Currency and deposits 13993 11505 2488 21257 18120 3137
3.4.2.1 Central bank (Rupee Debt Movements; NRG) 0 2 -2 0 72 -72
3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 13993 11504 2490 21257 18048 3209
3.4.2.3 General government 0 0 0 0
3.4.2.4 Other sectors 0 0 0 0
3.4.3 Loans (External Assistance, ECBs and Banking Capital) 9000 19637 -10638 22824 23693 -869
3.4.3.A Loans to India 8634 19515 -10881 19964 19743 220
3.4.3.B Loans by India 366 123 244 2860 3949 -1089
3.4.4 Insurance, pension, and standardized guarantee schemes 59 1 59 144 10 134
3.4.5 Trade credit and advances 17152 16842 310 17748 14232 3516
3.4.6 Other accounts receivable/payable - other 2380 6058 -3679 6300 4969 1331
3.4.7 Special drawing rights 0 0 0 0 0
3.5 Reserve assets 30379 0 30379 0 2519 -2519
3.5.1 Monetary gold 0 0 0 0
3.5.2 Special drawing rights n.a. 0 0 0 0 0
3.5.3 Reserve position in the IMF n.a. 0 0 0 0
3.5.4 Other reserve assets (Foreign Currency Assets) 30379 0 30379 0 2519 -2519
4 Total assets/liabilities 180199 148394 31806 202361 194857 7504
4.1 Equity and investment fund shares 96603 84188 12416 123566 121427 2139
4.2 Debt instruments 50837 58147 -7310 72495 65942 6553
4.3 Other financial assets and liabilities 32758 6058 26700 6300 7488 -1188
5 Net errors and omissions 0 937 -937 844 0 844
Note: P: Preliminary.

RBI Bulletin January 2024 179

CURRENT STATISTICS

No.No.
41:41:
Standard
StandardPresentation of BoP
Presentation of BoPininIndia
Indiaasas per
per BPM6
BPM6
(₹(₹(₹Crore)
Crore)
Crore)
Jul-Sep 2022 Jul-Sep 2023 (P)
Item
Credit Debit Net Credit Debit Net

1 2 3 4 5 6
1 Current Account (1.A+1.B+1.C) 1797946 2044398 -246452 1914433 1983040 -68606
1.A Goods and Services (1.A.a+1.A.b) 1530750 1880954 -350204 1585698 1759978 -174280
1.A.a Goods (1.A.a.1 to 1.A.a.3) 892533 1517441 -624907 896615 1401132 -504517
1.A.a.1 General merchandise on a BOP basis 890032 1439429 -549396 889277 1297370 -408093
1.A.a.2 Net exports of goods under merchanting 2501 0 2501 7339 0 7339
1.A.a.3 Nonmonetary gold 0 78012 -78012 0 103763 -103763
1.A.b Services (1.A.b.1 to 1.A.b.13) 638217 363513 274704 689083 358846 330237
1.A.b.1 Manufacturing services on physical inputs owned by others 2480 223 2256 2339 320 2019
1.A.b.2 Maintenance and repair services n.i.e. 396 4323 -3927 465 2544 -2078
1.A.b.3 Transport 76035 90467 -14432 58377 60151 -1774
1.A.b.4 Travel 46081 60160 -14079 61845 71601 -9756
1.A.b.5 Construction 6848 6643 205 7887 5598 2289
1.A.b.6 Insurance and pension services 6031 4676 1355 6850 6785 66
1.A.b.7 Financial services 16862 12764 4098 17106 9777 7329
1.A.b.8 Charges for the use of intellectual property n.i.e. 2589 17749 -15161 3485 27618 -24133
1.A.b.9 Telecommunications, computer, and information services 296127 33035 263092 335161 41064 294097
1.A.b.10 Other business services 152740 111423 41317 177488 113019 64469
1.A.b.11 Personal, cultural, and recreational services 7319 13197 -5878 10012 17193 -7180
1.A.b.12 Government goods and services n.i.e. 1463 1751 -288 1154 2018 -863
1.A.b.13 Others n.i.e. 23247 7102 16146 6913 1160 5753
1.B Primary Income (1.B.1 to 1.B.3) 48094 142162 -94067 96084 196826 -100742
1.B.1 Compensation of employees 13003 6816 6187 14544 7579 6965
1.B.2 Investment income 28402 134499 -106097 71464 185831 -114368
1.B.2.1 Direct investment 17120 79356 -62236 16768 102143 -85375
1.B.2.2 Portfolio investment 442 23280 -22838 692 30227 -29535
1.B.2.3 Other investment 1162 31499 -30336 4298 51664 -47365
1.B.2.4 Reserve assets 9677 364 9313 49705 1797 47908
1.B.3 Other primary income 6690 846 5843 10076 3415 6661
1.C Secondary Income (1.C.1+1.C.2) 219101 21283 197819 232651 26235 206416
1.C.1 Financial corporations, nonfinancial corporations, households, and NPISHs 218719 19305 199414 232466 24416 208049
1.C.1.1 Personal transfers (Current transfers between resident and/non-resident households) 212941 13968 198973 225958 16860 209099
1.C.1.2 Other current transfers 5779 5337 442 6507 7557 -1049
1.C.2 General government 382 1978 -1596 186 1819 -1633
2 Capital Account (2.1+2.2) 1089 953 136 1245 1645 -400
2.1 Gross acquisitions (DR.)/disposals (CR.) of non-produced nonfinancial assets 50 289 -239 74 755 -680
2.2 Capital transfers 1039 664 375 1170 890 280
3 Financial Account (3.1 to 3.5) 1437917 1184122 253796 1672748 1610717 62031
3.1 Direct Investment (3.1A+3.1B) 144465 94920 49545 137433 139804 -2370
3.1.A Direct Investment in India 134857 62266 72591 130295 104866 25429
3.1.A.1 Equity and investment fund shares 122656 56743 65912 121464 101488 19976
3.1.A.1.1 Equity other than reinvestment of earnings 85372 56743 28629 81661 101488 -19827
3.1.A.1.2 Reinvestment of earnings 37283 0 37283 39803 0 39803
3.1.A.2 Debt instruments 12202 5523 6678 8831 3378 5453
3.1.A.2.1 Direct investor in direct investment enterprises 12202 5523 6678 8831 3378 5453
3.1.B Direct Investment by India 9608 32654 -23046 7138 34938 -27800
3.1.B.1 Equity and investment fund shares 9608 23024 -13416 7138 21839 -14701
3.1.B.1.1 Equity other than reinvestment of earnings 9608 14223 -4615 7138 12309 -5171
3.1.B.1.2 Reinvestment of earnings 0 8801 -8801 0 9530 -9530
3.1.B.2 Debt instruments 0 9630 -9630 0 13098 -13098
3.1.B.2.1 Direct investor in direct investment enterprises 0 9630 -9630 0 13098 -13098
3.2 Portfolio Investment 651761 599639 52122 925695 884807 40889
3.2.A Portfolio Investment in India 649339 594268 55071 918597 874902 43695
3.2.1 Equity and investment fund shares 576224 528326 47898 839257 809559 29698
3.2.2 Debt securities 73116 65943 7173 79340 65343 13997
3.2.B Portfolio Investment by India 2422 5371 -2949 7099 9905 -2806
3.3 Financial derivatives (other than reserves) and employee stock options 59477 58316 1161 45263 60858 -15595
3.4 Other investment 339803 431246 -91443 564356 504430 59927
3.4.1 Other equity (ADRs/GDRs) 0 0 0 0 0 0
3.4.2 Currency and deposits 111661 91807 19854 175715 149782 25933
3.4.2.1 Central bank (Rupee Debt Movements; NRG) 0 13 -13 0 594 -594
3.4.2.2 Deposit-taking corporations, except the central bank (NRI Deposits) 111661 91794 19867 175715 149187 26528
3.4.2.3 General government 0 0 0 0 0 0
3.4.2.4 Other sectors 0 0 0 0 0 0
3.4.3 Loans (External Assistance, ECBs and Banking Capital) 71816 156699 -84883 188667 195847 -7180
3.4.3.A Loans to India 68892 155720 -86828 165024 163202 1822
3.4.3.B Loans by India 2924 979 1945 23643 32645 -9002
3.4.4 Insurance, pension, and standardized guarantee schemes 471 4 467 1194 85 1109
3.4.5 Trade credit and advances 136866 134391 2475 146704 117640 29063
3.4.6 Other accounts receivable/payable - other 18988 48344 -29356 52077 41076 11001
3.4.7 Special drawing rights 0 0 0 0 0 0
3.5 Reserve assets 242411 0 242411 0 20819 -20819
3.5.1 Monetary gold 0 0 0 0 0 0
3.5.2 Special drawing rights n.a. 0 0 0 0 0 0
3.5.3 Reserve position in the IMF n.a. 0 0 0 0 0 0
3.5.4 Other reserve assets (Foreign Currency Assets) 242411 0 242411 0 20819 -20819
4 Total assets/liabilities 1437917 1184122 253796 1672748 1610717 62031
4.1 Equity and investment fund shares 770858 671784 99073 1021414 1003733 17681
4.2 Debt instruments 405661 463993 -58333 599256 545089 54168
4.3 Other financial assets and liabilities 261399 48344 213056 52077 61895 -9818
5 Net errors and omissions 0 7480 -7480 6975 0 6975

Note: P: Preliminary.

180 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 42: India's International Investment Position

No. 42: India’s International Investment Position
(US$ Million)

Item As on Financial Year/Quarter End

2022-23 2022 2023

Sep. Jun. Sep.

Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities

1 2 3 4 5 6 7 8
1. Direct investment Abroad/in India 225592 523312 217331 510132 227886 532300 231249 528599

1.1 Equity Capital* 142071 493896 136252 481978 143548 501438 145327 497714

1.2 Other Capital 83521 29416 81079 28153 84338 30862 85923 30885

2. Portfolio investment 10966 243522 10983 244349 11325 258453 11664 259385

2.1 Equity 4958 138958 6312 137013 8698 152928 7939 154634

2.2 Debt 6008 104564 4671 107335 2627 105525 3726 104751

3. Other investment 87717 503281 85860 478823 92599 515584 102181 525685

3.1 Trade credit 27507 124304 24618 123158 29718 119301 31088 122821

3.2 Loan 10714 202514 8084 190195 14499 207119 9739 208956

3.3 Currency and Deposits 30526 141133 33528 135621 30584 144069 43364 146150

3.4 Other Assets/Liabilities 18970 35330 19630 29850 17798 45094 17991 47758

4. Reserves 578449 532664 595051 587714

5. Total Assets/ Liabilities 902725 1270115 846837 1233303 926862 1306336 932809 1313670

6. Net IIP (Assets - Liabilities) -367390 -386466 -379474 -380861

Note: * Equity capital includes share of investment funds and reinvested earnings.

RBI Bulletin January 2024 181

CURRENT STATISTICS

Payment and Settlement Systems

No.43:No.Payment
43: Payment system Indicators
System Indicators
PART I - Payment System Indicators - Payment & Settlement System Statistics

System Volume (Lakh) Value (₹ Crore)

FY 2022-23 2022 2023 FY 2022-23 2022 2023

Nov. Oct. Nov. Nov. Oct. Nov.
1 2 3 4 5 6 7 8
A. Settlement Systems

Financial Market Infrastructures (FMIs)

1 CCIL Operated Systems (1.1 to 1.3) 41.44 3.67 3.31 3.08 258797336 22488758 21422005 21011085
1.1 Govt. Securities Clearing (1.1.1 to 1.1.3) 15.00 1.26 1.26 1.24 172251292 15457897 13902085 13568124
1.1.1 Outright 7.99 0.66 0.66 0.64 10090700 759097 889349 939382
1.1.2 Repo 4.07 0.36 0.40 0.41 68032487 6039868 5760793 5919154
1.1.3 Tri-party Repo 2.94 0.23 0.20 0.19 94128105 8658933 7251944 6709589
1.2 Forex Clearing 25.16 2.33 1.96 1.74 78932050 6577286 7018310 6922315
1.3 Rupee Derivatives @ 1.27 0.08 0.10 0.10 7613994 453575 501610 520645
B. Payment Systems

I Financial Market Infrastructures (FMIs) - - - - - - - -

1 Credit Transfers - RTGS (1.1 to 1.2) 2425.62 206.46 224.62 219.20 149946286 12291749 13464400 13591443
1.1 Customer Transactions 2411.19 205.30 223.48 218.05 131667176 10691727 11899324 12078797
1.2 Interbank Transactions 14.43 1.16 1.14 1.15 18279111 1600022 1565076 1512645

II Retail
2 Credit Transfers - Retail (2.1 to 2.6) 983620.84 84557.58 128356.32 128072.73 55009620 4527540 5667254 5673303
2.1 AePS (Fund Transfers) @ 5.90 0.51 0.31 0.30 356 29 20 19
2.2 APBS $ 17833.95 1065.62 1745.79 3221.01 247535 9460 19666 47635
2.3 IMPS 56532.64 4634.80 4928.80 4723.84 5585441 454679 538239 535002
2.4 NACH Cr $ 19257.19 1373.88 1278.99 1380.65 1541815 141901 131546 142415
2.5 NEFT 52847.43 4388.30 6314.53 6394.01 33719541 2730878 3262015 3208491
2.6 UPI @ 837143.73 73094.47 114087.90 112352.92 13914932 1190593 1715768 1739741
2.6.1 of which USSD @ 17.21 1.79 2.63 2.69 197 19 38 37
3 Debit Transfers and Direct Debits (3.1 to 3.3) 15343.05 1316.60 1499.66 1527.84 1289611 110181 139050 142456
3.1 BHIM Aadhaar Pay @ 214.22 14.52 15.14 18.82 6791 475 525 590
3.2 NACH Dr $ 13502.52 1164.17 1348.29 1376.66 1280219 109479 138287 141646
3.3 NETC (linked to bank account) @ 1626.31 137.91 136.23 132.36 2601 227 238 220
4 Card Payments (4.1 to 4.2) 63324.72 4956.02 5104.71 4742.56 2152245 170388 230670 210038
4.1 Credit Cards (4.1.1 to 4.1.2) 29145.24 2347.73 3200.48 2970.90 1432255 114794 178569 160644
4.1.1 PoS based $ 15598.46 1275.99 1596.74 1583.66 541932 43456 57774 59015
4.1.2 Others $ 13546.79 1071.74 1603.73 1387.24 890323 71338 120795 101629
4.2 Debit Cards (4.2.1 to 4.2.1 ) 34179.48 2608.28 1904.23 1771.66 719989 55594 52101 49394
4.2.1 PoS based $ 22904.86 1779.46 1375.28 1301.95 476520 37238 33731 34379
4.2.2 Others $ 11274.61 828.82 528.95 469.71 243470 18355 18370 15015
5 Prepaid Payment Instruments (5.1 to 5.2) 74667.44 6075.20 6687.84 6510.09 287111 22808 25012 24248
5.1 Wallets 59112.76 4730.07 5301.96 5274.31 221896 17342 20630 19830
5.2 Cards (5.2.1 to 5.2.2) 15554.69 1345.14 1385.88 1235.79 65215 5466 4382 4418
5.2.1 PoS based $ 1013.09 77.72 750.95 683.31 14777 1039 884 906
5.2.2 Others $ 14541.60 1267.42 634.93 552.47 50438 4428 3498 3512
6 Paper-based Instruments (6.1 to 6.2) 7109.28 592.55 559.90 525.55 7172904 585389 584454 558866
6.1 CTS (NPCI Managed) 7109.28 592.55 559.90 525.55 7172904 585389 584454 558866
6.2 Others 0.00 – – – – – – –
Total - Retail Payments (2+3+4+5+6) 1144065.34 97497.95 142208.43 141378.76 65911490 5416306 6646440 6608910
Total Payments (1+2+3+4+5+6) 1146490.96 97704.41 142433.05 141597.96 215857776 17708056 20110841 20200353
Total Digital Payments (1+2+3+4+5) 1139381.68 97111.86 141873.15 141072.41 208684872 17122666 19526387 19641487

182 RBI Bulletin January 2024

 CURRENT STATISTICS

PART II - Payment Modes and Channels

System Volume (Lakh) Value (₹ Crore)

FY 2022-23 2022 2023 FY 2022-23 2022 2023

Nov. Oct. Nov. Nov. Oct. Nov.
1 2 3 4 5 6 7 8
A. Other Payment Channels

1 Mobile Payments (mobile app based) (1.1 to 1.2) 805338.23 70188.36 109334.05 108174.37 22031628 1874436 2619086 2641046

1.1 Intra-bank $ 62306.61 5342.59 6877.68 6927.98 4191430 355045 474253 478327

1.2 Inter-bank $ 743031.61 64845.77 102456.37 101246.39 17840197 1519391 2144833 2162720

2 Internet Payments (Netbanking / Internet Browser Based) @ (2.1 to 2.2) 42630.64 3486.07 3736.00 3622.58 91539296 7786127 8464802 8033440

2.1 Intra-bank @ 10703.78 870.33 983.50 988.62 53506133 4606598 4400612 4130936

2.2 Inter-bank @ 31926.86 2615.74 2752.51 2633.96 38033163 3179529 4064190 3902504

B. ATMs

3 Cash Withdrawal at ATMs $ (3.1 to 3.3) 69468.87 5608.38 5721.32 5542.64 3305008 265636 277832 276530

3.1 Using Credit Cards $ 88.37 7.59 8.54 7.89 4296 367 413 391

3.2 Using Debit Cards $ 68975.18 5568.42 5683.38 5505.75 3286749 264180 276289 275032

3.3 Using Pre-paid Cards $ 405.32 32.36 29.40 28.99 13963 1089 1130 1107

4 Cash Withdrawal at PoS $ (4.1 to 4.2) 27.73 2.29 0.85 0.75 278 22 8 7

4.1 Using Debit Cards $ 27.41 2.26 0.84 0.75 276 22 8 7

4.2 Using Pre-paid Cards $ 0.33 0.02 0.01 0.01 2 0 0 0

5 Cash Withrawal at Micro ATMs @ 12375.16 944.92 986.49 1079.59 333966 25541 25378 28972

5.1 AePS @ 12375.16 944.92 986.49 1079.59 333966 25541 25378 28972

PART III - Payment Infrastructures (Lakh)

System As on March 2022 2023

2023 Nov. Oct. Nov.
1 2 3 4

Payment System Infrastructures

1 Number of Cards (1.1 to 1.2) 10465.62 10283.35 10748.82 10751.32

1.1 Credit Cards 853.03 806.06 947.11 960.01

1.2 Debit Cards 9612.59 9477.29 9801.71 9791.30

2 Number of PPIs @ (2.1 to 2.2) 16185.22 16098.32 16830.82 16944.42

2.1 Wallets @ 13384.65 13269.83 13576.88 13693.59

2.2 Cards @ 2800.57 2828.48 3253.93 3250.83

3 Number of ATMs (3.1 to 3.2) 2.59 2.55 2.58 2.58

3.1 Bank owned ATMs $ 2.23 2.20 2.23 2.24

3.2 White Label ATMs $ 0.36 0.36 0.35 0.34

4 Number of Micro ATMs @ 16.11 13.34 15.30 15.87

5 Number of PoS Terminals 77.90 73.52 83.48 84.32

6 Bharat QR @ 53.82 48.25 59.75 58.74

7 UPI QR * 2563.77 2302.87 3017.20 3087.39

@: New inclusion w.e.f. November 2019

#: Data reported by Co-operative Banks, LABs and RRBs included with effect from December 2021.
$ : Inclusion separately initiated from November 2019 - would have been part of other items hitherto.
*: New inclusion w.e.f. September 2020; Includes only static UPI QR Code
Note : 1. Data is provisional.
2. ECS (Debit and Credit) has been merged with NACH with effect from January 31, 2020.
3. The data from November 2019 onwards for card payments (Debit/Credit cards) and Prepaid Payment Instruments (PPIs) may not be comparable with earlier months/ periods, as more granular data is being
published along with revision in data definitions.
4. Only domestic financial transactions are considered. The new format captures e-commerce transactions; transactions using FASTags, digital bill payments and card-to-card transfer through ATMs, etc..
Also, failed transactions, chargebacks, reversals, expired cards/ wallets, are excluded.
Part I-A. Settlement systems
1.1.3: Tri- party Repo under the securities segment has been operationalised from November 05, 2018.
Part I-B. Payments systems
4.1.2: ‘Others’ includes e-commerce transactions and digital bill payments through ATMs, etc.
4.2.2: ‘Others’ includes e-commerce transactions, card to card transfers and digital bill payments through ATMs, etc.
5: Available from December 2010.
5.1: includes purchase of goods and services and fund transfer through wallets.
5.2.2: includes usage of PPI Cards for online transactions and other transactions.
6.1: Pertain to three grids – Mumbai, New Delhi and Chennai.
6.2: ‘Others’ comprises of Non-MICR transactions which pertains to clearing houses managed by 21 banks.
Part II-A. Other payment channels
1: Mobile Payments –
o Include transactions done through mobile apps of banks and UPI apps.
o The data from July 2017 includes only individual payments and corporate payments initiated, processed, and authorised using mobile device. Other corporate payments which are not initiated, processed, and
authorised using mobile device are excluded.
2: Internet Payments – includes only e-commerce transactions through ‘netbanking’ and any financial transaction using internet banking website of the bank.
Part II-B. ATMs
3.3 and 4.2: only relates to transactions using bank issued PPIs.
Part III. Payment systems infrastructure
3: Includes ATMs deployed by Scheduled Commercial Banks (SCBs) and White Label ATM Operators (WLAOs). WLAs are included from April 2014 onwards.

RBI Bulletin January 2024 183

CURRENT STATISTICS

Occasional Series
No. 44:
No. 44: Small
Small Savings
Savings
(₹
(₹ Crore)
Crore)
Scheme 2022-23 2022 2023
Mar. Jan. Feb. Mar.

12 2 3 4 5

1 Small Savings Receipts 173993 35956 11283 11210 38052

Outstanding 1636935 1463777 1588155 1599193 1636935

1.1 Total Deposits Receipts 125209 21967 7511 8093 24221

Outstanding 1137451 1012241 1105127 1113230 1137451
1.1.1 Post Office Saving Bank Deposits Receipts 20680 13930 -772 1170 8856

Outstanding 209112 247216 199087 200257 209112

1.1.2 Sukanya Samriddhi Yojna Receipts 29003 1844 1965 10316

Outstanding 87787 75507 77472 87787

1.1.3 National Saving Scheme, 1987 Receipts -244 -1271 -8 0 0

Outstanding 0 1894 1651 0 0

1.1.4 National Saving Scheme, 1992 Receipts -20 451 3 0 0

Outstanding 0 -177 -197 0 0

1.1.5 Monthly Income Scheme Receipts 6492 994 893 484 114

Outstanding 242313 235820 241714 242198 242313

1.1.6 Senior Citizen Scheme 2004 Receipts 17971 2094 1668 1475 1318

Outstanding 137304 119333 134511 135986 137304

1.1.7 Post Office Time Deposits Receipts 29155 3592 2866 1814 1497

Outstanding 280436 251282 277125 278939 280436

1.1.7.1 1 year Time Deposits Outstanding 125951 118282 124739 125377 125951

1.1.7.2 2 year Time Deposits Outstanding 9497 8008 9056 9282 9497

1.1.7.3 3 year Time Deposits Outstanding 7543 6918 7196 7380 7543

1.1.7.4 5 year Time Deposits Outstanding 137445 118074 136134 136900 137445

1.1.8 Post Office Recurring Deposits Receipts 21552 2171 1017 1203 1585

Outstanding 178422 156869 175633 176836 178422

1.1.9 Post Office Cumulative Time Deposits Receipts 0 4 0 0 0

Outstanding 0 -19 -19 0 0

1.1.10 Other Deposits Receipts 288 2 0 -18 306

Outstanding 1745 23 21 1439 1745

1.1.11 PM Care for children Receipts 332 0 0 229

Outstanding 332 94 103 332

1.2 Saving Certificates Receipts 33965 3768 2928 2504 3064

Outstanding 366317 333189 361242 363564 366317
1.2.1 National Savings Certificate VIII issue Receipts 10793 1320 868 658 1086

Outstanding 165836 155043 164092 164750 165836

1.2.2 Indira Vikas Patras Receipts 0 -16 0 0 0

Outstanding 0 143 142 0 0

1.2.3 Kisan Vikas Patras Receipts -1892 -184 -77 0 0

Outstanding 0 -7891 -9780 0 0

1.2.4 Kisan Vikas Patras - 2014 Receipts 25064 2564 2137 1846 1978

Outstanding 199624 174560 195800 197646 199624

1.2.5 National Saving Certificate VI issue Receipts 0 69 0 0 0

Outstanding 0 -22 -22 0 0

1.2.6 National Saving Certificate VII issue Receipts 0 15 0 0 0

Outstanding 0 -44 -44 0 0

1.2.7 Other Certificates Outstanding 857 11400 11054 1168 857

1.3 Public Provident Fund Receipts 14819 10221 844 613 10767

Outstanding 133167 118347 121786 122399 133167

Note :: Data
Note Data on
on receipts
receiptsfrom
fromApril
April2017
2017are
arenet
netreceipts, i.e.,
receipts, gross
i.e., receipt
gross minus
receipt gross
minus payment.
gross payment.
Source: Accountant General, Post and Telegraphs.
Source: Accountant General, Post and Telegraphs.

184 RBI Bulletin January 2024

 CURRENT STATISTICS

No 45 : Ownership Pattern of Central and State Governments Securities

No. 45 : Ownership Pattern of Central and State Governments Securities
(Per(Per
cent)
cent)
Central Government Dated Securities
2022 2023
Category
Sep. Dec. Mar. Jun. Sep.
1 2 3 4 5
(A) Total (in ₹. Crore) 9098788 9373372 9645776 9898751 10383607
1 Commercial Banks 36.44 36.13 36.61 36.58 37.96
2 Co-operative Banks 1.80 1.70 1.64 1.56 1.52
3 Non-Bank PDs 0.38 0.44 0.49 0.73 0.66
4 Insurance Companies 25.94 26.14 25.97 26.21 26.05
5 Mutual Funds 2.58 2.87 2.81 2.69 3.02
6 Provident Funds 4.66 4.67 4.71 4.59 4.42
7 Pension Funds 3.84 3.91 3.98 4.18 4.32
8 Financial Institutions 0.98 1.07 0.98 1.20 0.54
9 Corporates 1.58 1.57 1.62 1.22 1.21
10 Foreign Portfolio Investors 1.38 1.31 1.36 1.59 1.61
11 RBI 15.28 14.73 14.26 13.78 13.06
12 Others 5.14 5.45 5.57 5.67 5.64
12.1 State Governments 1.83 1.88 2.03 2.03 2.04

State Governments Securities

2022 2023
Category
Sep. Dec. Mar. Jun. Sep.
1 2 3 4 5
(B) Total (in ₹. Crore) 4589128 4712902 4929079 5050874 5161642
1 Commercial Banks 34.37 34.34 33.91 34.13 33.87
2 Co-operative Banks 3.89 3.80 3.64 3.68 3.60
3 Non-Bank PDs 0.36 0.44 0.62 0.50 0.61
4 Insurance Companies 27.71 27.42 26.80 26.73 26.97
5 Mutual Funds 2.08 2.02 1.94 2.08 1.86
6 Provident Funds 20.18 20.31 21.29 21.19 21.70
7 Pension Funds 4.73 4.74 4.81 4.84 4.82
8 Financial Institutions 1.71 1.77 1.84 1.82 1.65
9 Corporates 1.85 1.94 2.00 1.92 1.87
10 Foreign Portfolio Investors 0.02 0.02 0.02 0.02 0.02
11 RBI 0.79 0.75 0.72 0.70 0.69
12 Others 2.32 2.45 2.42 2.39 2.34
12.1 State Governments 0.21 0.24 0.27 0.27 0.27

Treasury Bills

2022 2023
Category
Sep. Dec. Mar. Jun. Sep.
1 2 3 4 5
(C) Total (in ₹. Crore) 920205 839931 823313 1012301 925317
1 Commercial Banks 50.91 49.15 53.92 47.64 56.35
2 Co-operative Banks 1.48 1.27 1.29 1.20 1.20
3 Non-Bank PDs 2.12 2.17 2.85 1.99 0.54
4 Insurance Companies 5.46 5.81 6.11 4.93 5.26
5 Mutual Funds 11.98 14.23 15.30 17.04 12.74
6 Provident Funds 3.21 1.37 0.10 1.46 1.52
7 Pension Funds 0.02 0.02 0.07 0.01 0.01
8 Financial Institutions 4.17 4.52 3.72 7.96 4.10
9 Corporates 3.86 3.59 4.99 4.42 4.00
10 Foreign Portfolio Investors 0.53 0.50 0.40 0.12 0.10
11 RBI 0.00 0.00 0.00 0.00 0.00
12 Others 16.25 17.37 11.25 13.23 14.17
12.1 State Governments 12.27 13.38 7.16 10.33 11.36

Note: (-) represents nil or negligible

The table format is revised since June 2023 issue of the bulletin.
RBI Bulletin
State January Securities
Government 2024 include special bonds issued under Ujwal DISCOM Assurance Yojana (UDAY). 185
Bank PDs are clubbed under Commercial Banks. However, they form very small fraction of total outstanding securities.
The category ‘Others’ comprises State Governments, DICGC, PSUs, Trusts, Foreign Central Banks, HUF/Individuals etc.
Data since September 2023 includes the impact of the merger of a non-bank with a bank.
CURRENT STATISTICS

No. 46: No. 46: Combined

Combined Receipts
Receipts and and Disbursements ofofthe
Disbursements Central
the and and
Central StateState
Governments
Governments
(₹ Crore)
(₹ Crore)

Item 2018-19 2019-20 2020-21 2021-22 2022-23 RE 2023-24 BE

1 2 3 4 5 6
1 Total Disbursements 5040747 5410887 6353359 7098451 8376972 9045119
1.1 Developmental 2882758 3074492 3823423 4189146 5073367 5426440
1.1.1 Revenue 2224367 2446605 3150221 3255207 3838714 3836447
1.1.2 Capital 596774 588233 550358 861777 1146013 1471534
1.1.3 Loans 61617 39654 122844 72163 88639 118460
1.2 Non-Developmental 2078276 2253027 2442941 2810388 3188699 3490946
1.2.1 Revenue 1965907 2109629 2271637 2602750 2988556 3277722
1.2.1.1 Interest Payments 894520 955801 1060602 1226672 1403183 1589435
1.2.2 Capital 111029 141457 169155 175519 196688 208268
1.2.3 Loans 1340 1941 2148 32119 3455 4957
1.3 Others 79713 83368 86995 98916 114906 127733
2 Total Receipts 5023352 5734166 6397162 7156342 8258187 9149787
2.1 Revenue Receipts 3797731 3851563 3688030 4823821 5706246 6337126
2.1.1 Tax Receipts 3278947 3231582 3193390 4160414 4837048 5477428
2.1.1.1 Taxes on commodities and services 2030050 2012578 2076013 2626553 2967610 3372525
2.1.1.2 Taxes on Income and Property 1246083 1216203 1114805 1530636 1865298 2100430
2.1.1.3 Taxes of Union Territories (Without Legislature) 2814 2800 2572 3225 4140 4473
2.1.2 Non-Tax Receipts 518783 619981 494640 663407 869198 859698
2.1.2.1 Interest Receipts 36273 31137 33448 35250 37974 45199
2.2 Non-debt Capital Receipts 140287 110094 64994 44077 88273 119373
2.2.1 Recovery of Loans & Advances 44667 59515 16951 27665 25661 34501
2.2.2 Disinvestment proceeds 95621 50578 48044 16412 62611 84872
3 Gross Fiscal Deficit [ 1 - ( 2.1 + 2.2 ) ] 1102729 1449230 2600335 2230553 2582453 2588620
3A Sources of Financing: Institution-wise
3A.1 Domestic Financing 1097210 1440548 2530155 2194406 2558579 2566503
3A.1.1 Net Bank Credit to Government 387091 571872 890012 627255 687904 .....
3A.1.1.1 Net RBI Credit to Government 325987 190241 107493 350911 529 .....
3A.1.2 Non-Bank Credit to Government 710119 868676 1640143 1567151 1870675 .....
3A.2 External Financing 5519 8682 70180 36147 23874 22118
3B Sources of Financing: Instrument-wise
3B.1 Domestic Financing 1097210 1440548 2530155 2194406 2558579 2566503
3B.1.1 Market Borrowings (net) 795845 971378 1696012 1213169 1776747 1902862
3B.1.2 Small Savings (net) 88961 209232 458801 526693 403838 441189
3B.1.3 State Provident Funds (net) 51004 38280 41273 28100 36454 37114
3B.1.4 Reserve Funds -18298 10411 4545 42153 3524 24429
3B.1.5 Deposits and Advances 66289 -14227 25682 42203 82485 58404
3B.1.6 Cash Balances 17395 -323279 -43802 -57891 118784 -104667
3B.1.7 Others 96014 548753 347643 399980 136748 207172
3B.2 External Financing 5519 8682 70180 36147 23874 22118
4 Total Disbursements as per cent of GDP 26.7 26.9 32.0 30.2 30.8 30.0
5 Total Receipts as per cent of GDP 26.6 28.5 32.3 30.5 30.3 30.3
6 Revenue Receipts as per cent of GDP 20.1 19.2 18.6 20.6 20.9 21.0
7 Tax Receipts as per cent of GDP 17.3 16.1 16.1 17.7 17.8 18.2
8 Gross Fiscal Deficit as per cent of GDP 5.8 7.2 13.1 9.5 9.5 8.6

… : Not available; RE: Revised Estimates; BE: Budget Estimates

Source : Budget Documents of Central and State Governments.
Note: GDP data is based on 2011-12 base. GDP for 2023-24 is from Union Budget 2023-24.
Data pertains to all States and Union Territories.
1 & 2: Data are net of repayments of the Central Government (including repayments to the NSSF) and State Governments.
1.3: Represents compensation and assignments by States to local bodies and Panchayati Raj institutions.
2: Data are net of variation in cash balances of the Central and State Governments and includes borrowing receipts of the Central and State Governments.
3A.1.1: Data as per RBI records.
3B.1.1: Borrowings through dated securities.
3B.1.2: Represent net investment in Central and State Governments’ special securities by the National Small Savings Fund (NSSF).
This data may vary from previous publications due to adjustments across components with availability of new data.
3B.1.6: Include Ways and Means Advances by the Centre to the State Governments.
3B.1.7: Include Treasury Bills, loans from financial institutions, insurance and pension funds, remittances, cash balance investment account.

186 RBI Bulletin January 2024

 CURRENT STATISTICS

No.
No.4747:
: Financial
Financial Accommodation Availedby
Accommodation Availed byState
StateGovernments
Governments under
under various
various Facilities
Facilities

(₹ Crore)

During November-2023

Sr. State/Union Territory Special Drawing Ways and Means

Overdraft (OD)
No Facility (SDF) Advances (WMA)

Average Number Average Number Average Number

amount of days amount of days amount of days
availed availed availed availed availed availed
1 2 3 4 5 6 7
1 Andhra Pradesh 832.35 29 1501.37 28 810.23 3
2 Arunachal Pradesh - - - - - -
3 Assam 718.18 12 - - - -
4 Bihar - - - - - -
5 Chhattisgarh 1315.26 13 - - - -
6 Goa - - - - - -
7 Gujarat - - - - - -
8 Haryana 392.35 18 629.43 9 - -
9 Himachal Pradesh - - 361.37 4 - -
10 Jammu & Kashmir UT - - 938.62 30 633.51 13
11 Jharkhand - - - - - -
12 Karnataka - - - - - -
13 Kerala 256.06 28 1090.64 27 360.93 7
14 Madhya Pradesh - - - - - -
15 Maharashtra - - - - - -
16 Manipur 13.68 27 213.98 27 113.83 22
17 Meghalaya 142.19 9 199.26 6 305.47 5
18 Mizoram 64.90 28 105.80 27 23.19 2
19 Nagaland 106.23 21 102.85 15 - -
20 Odisha - - - - - -
21 Puducherry - - - - - -
22 Punjab 1736.49 30 116.91 8 - -
23 Rajasthan 6942.65 30 438.38 6 - -
24 Tamil Nadu - - - - - -
25 Telangana 816.45 30 1426.02 29 554.53 13
26 Tripura - - - - - -
27 Uttar Pradesh - - - - - -
28 Uttarakhand 334.47 19 75.70 4 - -
29 West Bengal - - - - - -
Notes: 1.SDF
Notes:1. SDFisisavailed
availed by
by State Governmentsagainst
State Governments againstthethe collateral
collateral of Consolidated
of Consolidated Sinking
Sinking FundFund
(CSF),(CSF), Guarantee
Guarantee Redemption
Redemption Fund Fund (GRF)
&(GRF)
Auction Treasury
& Auction Bills (ATBs)
Treasury balances
Bills (ATBs) and other
balances investments
and other in government
investments in governmentsecurities.
securities.
2.2.WMA
WMAisisadvance
advance by by Reserve
ReserveBank
BankofofIndia
India
to to State
State Governments
Governments for meeting
for meeting temporary
temporary cash mismatches.
cash mismatches.
3.3.ODODisisadvanced
advanced to State Governments
to State Governmentsbeyond
beyond their
their WMA
WMA limits.
limits.
4.4.Average
Averageamount
Availedavailed is the
is the total total accommodation
accommodation (SDF/WMA/OD) (SDF/WMA/OD) availed
availed divided dividedofby
by number number
days of days
for which for which accommodation
accommodation
was
wasextended
extended during
during thethe month.
month.
5.5.-
- ::Nil.
Nil.
Source: ReserveBank
Source: Reserve BankofofIndia.
India.

RBI Bulletin January 2024 187

CURRENT STATISTICS
No 48: Investments by State Governments

No. 48: Investments by State Governments (₹(₹Crore)

Crore)
As on end of November 2023

Consolidated Guarantee
Sr. State/Union Government Auction Treasury
Sinking Fund Redemption Fund
No Territory Securities Bills (ATBs)
(CSF) (GRF)
12 23 34 45 56

1 Andhra Pradesh 10581 1043 0 0

2 Arunachal Pradesh 2400 5 0 3450
3 Assam 6335 82 0 0
4 Bihar 9983 - 0 1200
5 Chhattisgarh 6716 5 1 3550
6 Goa 869 419 0 0
7 Gujarat 12172 611 0 3000
8 Haryana 1859 1558 0 0
9 Himachal Pradesh - - 0 0
10 Jammu & Kashmir UT - - 0 0
11 Jharkhand 1640 - 0 0
12 Karnataka 16745 480 0 25340
13 Kerala 2794 - 0 0
14 Madhya Pradesh - 1171 0 0
15 Maharashtra 62483 1532 0 4000
16 Manipur 64 129 0 0
17 Meghalaya 1079 85 0 0
18 Mizoram 389 45 0 0
19 Nagaland 1628 42 0 0
20 Odisha 16592 1870 107 22162
21 Puducherry 495 - 0 1100
22 Punjab 8424 0 0 0
23 Rajasthan - - 129 6700
24 Tamil Nadu 8525 - 0 2878
25 Telangana 7223 1580 0 0
26 Tripura 1023 22 0 225
27 Uttarakhand 4600 194 0 0
28 Uttar Pradesh 6985 - 89 0
29 West Bengal 11698 851 239 0
Total 203303 11723 565 73605
Notes: 1. CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India.
2. CSF
Notes: 1. ATBs include
and Treasury
GRF are bills of
reserve funds 91 days, by
maintained 182 daysState
some andGovernments
364 days invested
with theby State Governments
Reserve Bank of India. in the primary market.
3.2. -ATBs
: Notinclude
Applicable (notbills
Treasury a member of the
of 91 days, 182scheme).
days and 364 days invested by State Governments in the primary market.
3. - : Not Applicable (not a member of the scheme).

188 RBI Bulletin January 2024

 CURRENT STATISTICS
No. 49: Market Borrowings of State Governments

No. 49: Market Borrowings of State Governments (₹

(₹ Crore)
Crore)

2023-24 Total amount

2021-22 2022-23 raised, so far in
September October November 2023-24
Sr. No. State
Gross Net Gross Net Gross Net Gross Net Gross Net
Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Gross Net
Raised Raised Raised Raised Raised Raised Raised Raised Raised Raised

1 2 3 4 55 66 77 88 99 10
10 11
11 12
12 13
13
1 Andhra Pradesh 46443 36103 57478 45814 6000 4447 5450 4743 4000 3414 50950 44721
2 Arunachal Pradesh 563 530 559 389 - - - -100 500 500 500 400
3 Assam 12753 10753 17100 16105 1000 1000 2000 2000 1000 500 11250 10750
4 Bihar 28489 24334 36800 27467 4000 1922 4000 1500 6000 6000 24000 11422
5 Chhattisgarh 4000 913 2000 -2287 2000 1300 1000 200 2000 2000 8000 5000
6 Goa 2000 1450 1350 500 450 450 200 200 500 350 1850 1150
7 Gujarat 31054 13554 43000 28300 2500 416 1000 -469 2000 1000 11000 2431
8 Haryana 30500 20683 45158 28638 6000 5011 2500 1560 4500 4500 29000 19362
9 Himachal Pradesh 4000 1875 14000 11941 500 223 1000 1000 800 800 4100 2973
10 Jammu & Kashmir UT 8562 5373 8473 5969 873 873 700 260 4100 4100 9773 8133
11 Jharkhand 5000 3191 4000 -155 - - - - - - - -800
12 Karnataka 59000 49000 36000 26000 - -1500 3000 1000 9000 7000 12000 4398
13 Kerala 27000 18120 30839 15620 1000 1000 1000 -250 3000 1750 23800 14100
14 Madhya Pradesh 22000 13900 40158 26849 9000 7500 4000 3000 4000 3000 23000 18000
15 Maharashtra 68750 40790 72000 42815 7000 3966 4000 748 17000 14140 60000 39969
16 Manipur 1476 1326 1422 1147 200 100 100 100 100 100 1100 1000
17 Meghalaya 1608 1298 1753 1356 - -160 322 322 170 70 1192 832
18 Mizoram 747 447 1315 1129 - - 60 60 - - 570 420
19 Nagaland 1727 1222 1854 1199 - - - - 350 220 1250 860
20 Odisha 0 -6473 0 -7500 - - - -500 - -1000 - -3000
21 Puducherry 1374 841 1200 698 - -125 - - - - - -125
22 Punjab 25814 12428 45500 33660 4739 4127 2352 1752 4206 3606 35046 25563
23 Rajasthan 51149 38243 46057 30110 6000 3500 3000 1030 11500 10000 45500 30218
24 Sikkim 1511 1471 1414 1320 250 250 400 355 - - 950 860
25 Tamil Nadu 87000 72500 87000 65722 6000 4348 10000 7750 6000 2250 69000 41680
26 Telangana 45716 39256 40150 30922 5000 3890 3000 2495 4500 4081 34500 30049
27 Tripura 300 0 0 -645 - - - - - - - -
28 Uttar Pradesh 62500 42355 55612 41797 - - 12000 9774 19200 18450 46700 38491
29 Uttarakhand 3200 1800 3200 1450 1000 1000 1300 1300 - - 2300 2300
30 West Bengal 67390 45199 63000 42500 6500 5000 5000 3434 6500 4000 29000 15500
Grand Total 701626 492483 758392 518829 70012 48540 67384 43263 110926 90831 536331 366657

- : Nil.
- : Nil. The State of J&K has ceased to exist constitutionally from October 31, 2019 and the liabilities of the State continue to remain as
Note:
Note: The Stateofofthe
liabilities J&K new
has ceased
UTtoof
existJammu
constitutionally
and from October 31, 2019 and the liabilities of the State continue to remain as liabilities of the new UT of Jammu and Kashmir.
Kashmir.
Reserve
Source: Reserve
Source: Bank of India.
Bank of India.

RBI Bulletin January 2024 189

CURRENT STATISTICS

No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise

No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise
(Amountinin`₹Crore)
(Amount Crore)
2020-21
Item
Q1 Q2 Q3 Q4 Annual
Net Financial Assets (I-II) 583412.7 554437.6 463583.5 679174.4 2280608.2
Per cent of GDP 15.0 11.7 8.5 11.8 11.5
I. Financial Assets 788786.3 592945.3 633317.9 1047276.1 3062325.6
Per cent of GDP 20.3 12.5 11.6 18.2 15.4
of which:
1.Total Deposits (a+b) 297412.4 278631.7 158172.2 506213.3 1240429.7
(a) Bank Deposits 281191.3 264565.3 147096.0 507719.3 1200571.8
i. Commercial Banks 279010.5 262033.7 143558.6 462689.8 1147292.5
ii. Co-operative Banks 2180.8 2531.6 3537.3 45029.5 53279.3
(b) Non-Bank Deposits 16221.1 14066.4 11076.3 -1506.0 39857.9
of which:
Other Financial Institutions (i+ii) 11040.9 8886.2 5896.0 -6686.2 19137.0
i. Non-Banking Financial Companies 1441.0 3763.0 3514.8 3521.2 12240.0
ii. Housing Finance Companies 9599.9 5123.2 2381.3 -10207.3 6897.0
2. Life Insurance Funds 124387.9 143462.2 157535.1 142216.5 567601.8
3. Provident and Pension Funds (including PPF) 114496.3 107087.9 105344.6 175769.3 502698.2
4. Currency 202432.7 21286.9 91456.0 66800.5 381976.1
5. Investments 6249.8 -12956.4 67659.3 63624.0 124576.7
of which:
(a) Mutual Funds -16021.0 -28837.7 57675.4 51267.0 64083.8
(b) Equity 18599.4 8291.5 5307.1 6333.3 38531.2
6. Small Savings (excluding PPF) 42751.6 54377.4 52095.1 91597.0 240821.1
II. Financial Liabilities 205373.6 38507.7 169734.4 368101.7 781717.4
Per cent of GDP 5.3 0.8 3.1 6.4 3.9
Loans/Borrowings
1. Financial Corporations (a+b) 205490.3 38624.3 169851.0 368219.1 782184.7
(a) Banking Sector 211058.8 13213.0 139622.0 276579.8 640473.6
of which:
i. Commercial Banks 211259.3 13213.8 140514.3 240050.4 605037.9
(b) Other Financial Institutions -5568.6 25411.3 30229.0 91639.4 141711.1
i. Non-Banking Financial Companies -15450.4 21627.1 15921.2 64881.1 86979.0
ii. Housing Finance Companies 10516.6 2875.1 13048.5 25336.1 51776.2
iii. Insurance Corporations -634.8 909.2 1259.3 1422.2 2955.9
2. Non-Financial Corporations (Private Corporate Business) 33.8 33.8 33.8 33.0 134.4
3. General Government -150.4 -150.4 -150.4 -150.4 -601.7

190 RBI Bulletin January 2024

 CURRENT STATISTICS
No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Contd.)

No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Contd.)
(Amountinin`₹Crore)
(Amount Crore)
2021-22
Item
Q1 Q2 Q3 Q4 Annual
Net Financial Assets (I-II) 370115.8 334234.9 489774.4 503089.0 1696155.6
Per cent of GDP 7.2 6.0 7.9 7.7 7.2
I. Financial Assets 364661.7 527896.1 818355.4 887657.3 2597511.9
Per cent of GDP 7.1 9.4 13.1 13.6 11.1
of which:
1.Total Deposits (a+b) -82726.1 204033.6 426977.3 277625.7 824852.1
(a) Bank Deposits -106428.9 197105.1 422392.9 264882.9 777952.1
i. Commercial Banks -107940.7 195441.8 418267.0 262326.1 768094.3
ii. Co-operative Banks 1511.8 1663.4 4125.9 2556.8 9857.8
(b) Non-Bank Deposits 23702.8 6928.5 4584.5 12742.8 46900.0
of which:
Other Financial Institutions (i+ii) 16950.0 170.7 -2178.3 5960.0 20902.3
i. Non-Banking Financial Companies 4972.6 -765.5 73.3 4211.8 8492.2
ii. Housing Finance Companies 11977.3 936.2 -2251.6 1748.2 12410.1
2. Life Insurance Funds 114711.5 127449.8 103248.6 121541.6 466951.5
3. Provident and Pension Funds (including PPF) 127624.0 115463.1 98146.0 221372.4 562605.5
4. Currency 128660.2 -68631.2 62793.3 146845.0 269667.4
5. Investments 24929.6 82305.4 69760.9 50972.1 227967.9
of which:
(a) Mutual Funds 14573.0 63151.3 37912.2 44963.7 160600.1
(b) Equity 4502.5 13218.5 27808.2 3084.1 48613.3
6. Small Savings (excluding PPF) 50405.2 66218.1 56372.0 68243.2 241238.4
II. Financial Liabilities -5454.1 193661.2 328581.0 384568.3 901356.3
Per cent of GDP -0.1 3.5 5.3 5.9 3.8
Loans/Borrowings
1. Financial Corporations (a+b) -5562.3 193553.0 328472.8 384460.1 900923.7
(a) Banking Sector 21436.5 138722.6 267950.7 348360.4 776470.2
of which:
i. Commercial Banks 26978.6 140268.7 265271.5 337009.8 769528.5
(b) Other Financial Institutions -26998.8 54830.4 60522.2 36099.7 124453.5
i. Non-Banking Financial Companies -34757.9 28876.8 29476.5 -2163.2 21432.2
ii. Housing Finance Companies 7132.0 24403.8 29494.8 37436.2 98466.8
iii. Insurance Corporations 627.1 1549.8 1550.9 826.7 4554.5
2. Non-Financial Corporations (Private Corporate Business) 33.8 33.8 33.8 33.8 135.1
3. General Government 74.4 74.4 74.4 74.4 297.4

RBI Bulletin January 2024 191

CURRENT STATISTICS

No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Concld.)
No. 50 (a): Flow of Financial Assets and Liabilities of Households - Instrument-wise (Concld.)
(Amountinin`₹Crore)
(Amount Crore)
2022-23
Item
Q1 Q2 Q3 Q4 Annual
Net Financial Assets (I-II) 297770.4 293705.1 279460.1 505937.8 1376873.5
Per cent of GDP 4.6 4.5 4.0 7.0 5.1
I. Financial Assets 586920.5 646714.8 750856.7 974558.5 2959050.5
Per cent of GDP 9.0 9.8 10.8 13.6 10.9
of which:
1.Total Deposits (a+b) 183072.0 315216.2 276593.9 324746.6 1099628.6
(a) Bank Deposits 163162.9 299545.0 256363.7 307491.6 1026563.1
i. Commercial Banks 158613.3 300565.0 248459.8 284968.0 992606.2
ii. Co-operative Banks 4549.6 -1020.1 7903.8 22523.6 33956.9
(b) Non-Bank Deposits 19909.1 15671.3 20230.2 17255.0 73065.5
of which:
Other Financial Institutions (i+ii) 6314.4 2076.7 6635.6 3660.4 18687.1
i. Non-Banking Financial Companies 4040.2 3267.2 1800.9 5372.2 14480.5
ii. Housing Finance Companies 2274.2 -1190.5 4834.7 -1711.8 4206.6
2. Life Insurance Funds 73669.9 152049.5 167894.1 141206.6 534820.1
3. Provident and Pension Funds (including PPF) 155604.2 132126.0 140204.4 235093.2 663027.7
4. Currency 66438.9 -54579.3 76760.1 148990.2 237609.8
5. Investments 51603.2 48630.6 49879.2 64168.5 214281.5
of which:
(a) Mutual Funds 35443.5 44484.0 40205.9 58954.5 179087.8
(b) Equity 13560.9 1378.2 6434.1 1664.9 23038.1
6. Small Savings (excluding PPF) 54375.1 51114.5 37367.7 58196.2 201053.5
II. Financial Liabilities 289150.0 353009.7 471396.5 468620.7 1582177.0
Per cent of GDP 4.4 5.4 6.8 6.5 5.8
Loans/Borrowings
1. Financial Corporations (a+b) 289141.6 353001.2 471388.1 468612.3 1582143.3
(a) Banking Sector 234845.3 263782.5 368167.4 349555.0 1216350.1
of which:
i. Commercial Banks 230283.8 261265.3 365304.6 331292.5 1188146.3
(b) Other Financial Institutions 54296.3 89218.8 103220.8 119057.3 365793.1
i. Non-Banking Financial Companies 29281.6 54439.6 75878.8 80295.9 239895.9
ii. Housing Finance Companies 22336.7 33031.2 24903.3 36745.8 117017.0
iii. Insurance Corporations 2678.0 1747.9 2438.7 2015.6 8880.3
2. Non-Financial Corporations (Private Corporate Business) 33.7 33.7 33.7 33.7 135.0
3. General Government -25.3 -25.3 -25.3 -25.3 -101.3

Notes :1. Net Financial Savings of households refer to the net financial assets, which are measured as difference of financial asset and
liabilities flows.
2. Preliminary estimates for 2022-23 and revised estimates for 2020-21 and 2021-22.
3. The preliminary estimates for 2022-23 will undergo revision with the release of first revised estimates of national income,
consumption expenditure, savings, and capital formation, 2022-23 by the NSO.
4. Non-bank deposits apart from other financial institutions, comprises state power utilities, co-operative non credit societies etc.
5. Figures in the columns may not add up to the total due to rounding off.

192 RBI Bulletin January 2024

 CURRENT STATISTICS

No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators
No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators
(Amount in ₹ Crore)
(Amount in ` Crore)
Item Jun-2020 Sep-2020 Dec-2020 Mar-2021

Financial Assets (a+b+c+d+e+f+g+h) 20405824.2 21066027.8 21906338.5 22874301.5

Per cent of GDP 107.2 111.5 114.0 115.4

(a) Bank Deposits (i+ii) 9977865.6 10242430.9 10389526.9 10897246.1

i. Commercial Banks 9192702.5 9454736.2 9598294.8 10060984.6

ii. Co-operative Banks 785163.1 787694.7 791232.1 836261.6

(b) Non-Bank Deposits

of which:

Other Financial Institutions 180857.4 189743.6 195639.6 188953.5

i. Non-Banking Financial Companies 51463.0 55226.1 58740.8 62262.0

ii. Housing Finance Companies 129394.4 134517.6 136898.8 126691.5

(c) Life Insurance Funds 4102000.7 4274424.9 4551882.0 4752932.3

(d) Currency 2434693.7 2455980.6 2547436.6 2614237.0

(e) Mutual funds 1343752.0 1443784.4 1648999.0 1730461.0

(f) Public Provident Fund (PPF) 663478.0 671884.3 678997.2 742189.5

(g) Pension Funds 464705.0 494930.0 548913.0 578025.0

(h) Small Savings (excluding PPF) 1238471.7 1292849.1 1344944.2 1370257.1

Financial Liabilities (a+b) 7190710.8 7229335.1 7399186.1 7767405.3

Per cent of GDP 37.8 38.3 38.5 39.2

Loans/Borrowings

(a) Banking Sector 5728735.3 5741948.3 5881570.2 6158150.0

of which:

i. Commercial Banks 5226482.2 5239696.0 5380210.4 5620260.7

ii. Co-operative Banks 500870.2 500865.3 499968.8 536494.1

(b) Other Financial Institutions 1461975.5 1487386.9 1517615.9 1609255.3

of which:

i. Non-Banking Financial Companies 687643.6 709270.7 725191.9 790073.0

ii. Housing Finance Companies 673118.3 675993.4 689041.8 714377.9

iii. Insurance Corporations 101213.7 102122.8 103382.2 104804.4

RBI Bulletin January 2024 193

CURRENT STATISTICS

No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Contd.)

No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Contd.)
(Amount in ₹ Crore)
(Amount in ` Crore)
Item Jun-2021 Sep-2021 Dec-2021 Mar-2022

Financial Assets (a+b+c+d+e+f+g+h) 23318920.4 23991428.3 24700622.2 25435684.2

Per cent of GDP 110.7 109.3 108.7 108.4

(a) Bank Deposits (i+ii) 10790817.3 10987922.4 11410315.3 11675198.2

i. Commercial Banks 9953043.9 10148485.7 10566752.7 10829078.8

ii. Co-operative Banks 837773.4 839436.7 843562.6 846119.4

(b) Non-Bank Deposits

of which:

Other Financial Institutions 205903.4 206074.1 203895.8 209855.7

i. Non-Banking Financial Companies 67234.6 66469.1 66542.3 70754.2

ii. Housing Finance Companies 138668.8 139605.0 137353.4 139101.6

(c) Life Insurance Funds 4929725.2 5142278.8 5213527.2 5357350.2

(d) Currency 2742897.3 2674266.1 2737059.4 2883904.4

(e) Mutual funds 1855000.1 2064363.5 2126112.0 2152140.5

(f) Public Provident Fund (PPF) 757397.8 762264.0 767287.3 834147.6

(g) Pension Funds 616517.0 667379.0 699173.0 736592.0

(h) Small Savings (excluding PPF) 1420662.3 1486880.4 1543252.3 1586495.5

Financial Liabilities (a+b) 7755119.8 7868215.0 8256715.7 8668329.0

Per cent of GDP 36.8 35.9 36.3 36.9

Loans/Borrowings

(a) Banking Sector 6172863.3 6231128.1 6559106.7 6934620.2

of which:

i. Commercial Banks 5640516.1 5700327.0 6025626.4 6389789.3

ii. Co-operative Banks 530937.1 529376.2 532040.6 543376.3

(b) Other Financial Institutions 1582256.5 1637086.9 1697609.1 1733708.8

of which:

i. Non-Banking Financial Companies 755315.1 784191.9 813668.4 811505.2

ii. Housing Finance Companies 721510.0 745913.7 775408.5 812844.7

iii. Insurance Corporations 105431.4 106981.2 108532.1 109358.8

194 RBI Bulletin January 2024

 CURRENT STATISTICS
No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Concld.)

No. 50 (b): Stocks of Financial Assets and Liabilities of Households- Select Indicators (Concld.)
(Amount Crore)
(Amountinin₹`Crore)

Item Jun-2022 Sep-2022 Dec-2022 Mar-2023

Financial Assets (a+b+c+d+e+f+g+h) 25689017.4 26240728.5 27208717.9 28083947.0

Per cent of GDP 103.2 101.5 102.4 103.1

(a) Bank Deposits (i+ii) 11911196.2 11956360.9 12421907.5 12701761.3

i. Commercial Banks 11060527.2 11106712.0 11564354.7 11821685.0

ii. Co-operative Banks 850669.0 849648.9 857552.8 880076.4

(b) Non-Bank Deposits

of which:

Other Financial Institutions 216170.2 218246.9 224882.5 228542.9

i. Non-Banking Financial Companies 74794.4 78061.6 79862.5 85234.7

ii. Housing Finance Companies 141375.8 140185.3 145020.0 143308.2

(c) Life Insurance Funds 5325967.3 5559681.9 5786592.6 6038630.4

(d) Currency 2950343.2 2895763.9 2972524.0 3121514.2

(e) Mutual funds 2048097.3 2260209.7 2355315.8 2367792.5

(f) Public Provident Fund (PPF) 851913.4 858591.1 864730.6 939814.6

(g) Pension Funds 744459.2 799889.0 853412.0 898342.0

(h) Small Savings (excluding PPF) 1640870.6 1691985.1 1729352.9 1787549.1

Financial Liabilities (a+b) 8957470.6 9310471.8 9781859.9 10253472.2

Per cent of GDP 36.0 36.0 36.8 37.6

Loans/Borrowings

(a) Banking Sector 7169465.5 7433248.0 7801415.3 8153970.3

of which:

i. Commercial Banks 6620073.1 6881338.5 7246643.0 7580935.6

ii. Co-operative Banks 547894.8 550354.8 553201.4 571339.8

(b) Other Financial Institutions 1788005.1 1877223.8 1980444.6 2099501.9

of which:

i. Non-Banking Financial Companies 840786.9 895226.5 971105.3 1051401.1

ii. Housing Finance Companies 835181.3 868212.5 893115.8 929861.7

iii. Insurance Corporations 112036.9 113784.8 116223.5 118239.1

Note : 1. Data as ratios to GDP have been calculated based on the Provisional Estimates of National Income 2022-23, released by
NSO on May 31, 2023.
2. Pension funds comprises funds with the National Pension Scheme.
3. Outstanding deposits with Small Savings are sourced from the Controller General of Accounts, Government of India.
4. Non-bank deposits apart from other financial institutions, comprises state power utilities, co-operative non credit
societies etc. Data for outstanding deposits are available only for other financial institutions.
5. Figures in the columns may not add up to the total due to rounding off.

RBI Bulletin January 2024 195

CURRENT STATISTICS

Explanatory Notes to the Current Statistics

Table No. 1
1.2& 6: Annual data are average of months.
3.5 & 3.7: Relate to ratios of increments over financial year so far.
4.1 to 4.4, 4.8,4.9 &5: Relate to the last friday of the month/financial year.
4.5, 4.6 & 4.7: Relate to five major banks on the last Friday of the month/financial year.
4.10 to 4.12: Relate to the last auction day of the month/financial year.
4.13: Relate to last day of the month/ financial year
7.1&7.2: Relate to Foreign trade in US Dollar.

Table No. 2
2.1.2: Include paid-up capital, reserve fund and Long-Term Operations Funds.
2.2.2: Include cash, fixed deposits and short-term securities/bonds, e.g., issued by IIFC (UK).

Table No. 4
Maturity-wise position of outstanding forward contracts is available at http://nsdp.rbi.org.in under
‘‘Reserves Template’’.

Table No. 5
Special refinance facility to Others, i.e. to the EXIM Bank, is closed since March 31, 2013.

Table No. 6
For scheduled banks, March-end data pertain to the last reporting Friday.
2.2: Exclude balances held in IMF Account No.1, RBI employees’ provident fund, pension fund, gratuity and
superannuation fund.

Table Nos. 7 & 11

3.1 in Table 7 and 2.4 in Table 11: Include foreign currency denominated bonds issued by IIFC (UK).

Table No. 8
NM2 and NM3 do not include FCNR (B) deposits.
2.4: Consist of paid-up capital and reserves.
2.5: includes other demand and time liabilities of the banking system.

Table No. 9
Financial institutions comprise EXIM Bank, SIDBI, NABARD and NHB.
L1 and L2 are compiled monthly and L3 quarterly.
Wherever data are not available, the last available data have been repeated.

Table No. 13
Data against column Nos. (1), (2) & (3) are Final and for column Nos. (4) & (5) data are Provisional.

196 RBI Bulletin January 2024

 CURRENT STATISTICS

Table No. 14
Data in column Nos. (4) & (8) are Provisional.

Table No. 17
2.1.1: Exclude reserve fund maintained by co-operative societies with State Co-operative Banks
2.1.2: Exclude borrowings from RBI, SBI, IDBI, NABARD, notified banks and State Governments.
4: Include borrowings from IDBI and NABARD.

Table No. 24
Primary Dealers (PDs) include banks undertaking PD business.

Table No. 30
Exclude private placement and offer for sale.
1: Exclude bonus shares.
2: Include cumulative convertible preference shares and equi-preference shares.

Table No. 32
Exclude investment in foreign currency denominated bonds issued by IIFC (UK), SDRs transferred by Government
of India to RBI and foreign currency received under SAARC and ACU currency swap arrangements. Foreign
currency assets in US dollar take into account appreciation/depreciation of non-US currencies (such as Euro,
Sterling, Yen and Australian Dollar) held in reserves. Foreign exchange holdings are converted into rupees at
rupee-US dollar RBI holding rates.

Table No. 34
1.1.1.1.2 & 1.1.1.1.1.4: Estimates.
1.1.1.2: Estimates for latest months.
‘Other capital’ pertains to debt transactions between parent and subsidiaries/branches of FDI enterprises.
Data may not tally with the BoP data due to lag in reporting.

Table No. 35
1.10: Include items such as subscription to journals, maintenance of investment abroad, student loan repayments
and credit card payments.

Table No. 36
Increase in indices indicates appreciation of rupee and vice versa. For 6-Currency index, base year 2021-22 is a
moving one, which gets updated every year. REER figures are based on Consumer Price Index (combined). The
details on methodology used for compilation of NEER/REER indices are available in December 2005, April 2014
and January 2021 issues of the RBI Bulletin.

Table No. 37
Based on applications for ECB/Foreign Currency Convertible Bonds (FCCBs) which have been allotted loan
registration number during the period.

RBI Bulletin January 2024 197

CURRENT STATISTICS

Table Nos. 38, 39, 40 & 41

Explanatory notes on these tables are available in December issue of RBI Bulletin, 2012.

Table No. 43
Part I-A. Settlement systems
1.1.3: Tri- party Repo under the securities segment has been operationalised from November 05, 2018.
Part I-B. Payments systems
4.1.2: ‘Others’ includes e-commerce transactions and digital bill payments through ATMs, etc.
4.2.2: ‘Others’ includes e-commerce transactions, card to card transfers and digital bill payments through
ATMs, etc.
5: Available from December 2010.
5.1: includes purchase of goods and services and fund transfer through wallets.
5.2.2: includes usage of PPI Cards for online transactions and other transactions.
6.1: Pertain to three grids – Mumbai, New Delhi and Chennai.
6.2: ‘Others’ comprises of Non-MICR transactions which pertains to clearing houses managed by 21 banks.
Part II-A. Other payment channels
1: Mobile Payments –
o Include transactions done through mobile apps of banks and UPI apps.
o The data from July 2017 includes only individual payments and corporate payments initiated,
processed, and authorised using mobile device. Other corporate payments which are not initiated,
processed, and authorised using mobile device are excluded.
2: Internet Payments – includes only e-commerce transactions through ‘netbanking’ and any financial
transaction using internet banking website of the bank.
Part II-B. ATMs
3.3 and 4.2: only relates to transactions using bank issued PPIs.
Part III. Payment systems infrastructure
3: Includes ATMs deployed by Scheduled Commercial Banks (SCBs) and White Label ATM Operators
(WLAOs). WLAs are included from April 2014 onwards.

Table No. 45
(-) represents nil or negligible
The table format is revised since June 2023 issue of the bulletin.
State Government Securities include special bonds issued under Ujjwal DISCOM Assurance Yojana (UDAY).
Bank PDs are clubbed under Commercial Banks. However, they form very small fraction of total outstanding
securities.
The category ‘Others’ comprises State Governments, DICGC, PSUs, Trusts, Foreign Central Banks, HUF/
Individuals etc.
Data since September 2023 includes the impact of the merger of a non-bank with a bank.

198 RBI Bulletin January 2024

 CURRENT STATISTICS

Table No. 46
GDP data is based on 2011-12 base. GDP for 2023-24 is from Union Budget 2023-24.
Data pertains to all States and Union Territories.
1 & 2: Data are net of repayments of the Central Government (including repayments to the NSSF) and State
Governments.
1.3: Represents compensation and assignments by States to local bodies and Panchayati Raj institutions.
2: Data are net of variation in cash balances of the Central and State Governments and includes borrowing
receipts of the Central and State Governments.
3A.1.1: Data as per RBI records.
3B.1.1: Borrowings through dated securities.
3B.1.2: Represent net investment in Central and State Governments’ special securities by the National Small
Savings Fund (NSSF).
This data may vary from previous publications due to adjustments across components with availability of new
data.
3B.1.6: Include Ways and Means Advances by the Centre to the State Governments.
3B.1.7: Include Treasury Bills, loans from financial institutions, insurance and pension funds, remittances, cash
balance investment account.

Table No. 47
SDF is availed by State Governments against the collateral of Consolidated Sinking Fund (CSF), Guarantee
Redemption Fund (GRF) & Auction Treasury Bills (ATBs) balances and other investments in government
securities.
WMA is advance by Reserve Bank of India to State Governments for meeting temporary cash mismatches.
OD is advanced to State Governments beyond their WMA limits.
Average amount Availed is the total accommodation (SDF/WMA/OD) availed divided by number of days for
which accommodation was extended during the month.
- : Nil.

Table No. 48
CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India.
ATBs include Treasury bills of 91 days, 182 days and 364 days invested by State Governments in the primary
market.
--: Not Applicable (not a member of the scheme).

The concepts and methodologies for Current Statistics are available in Comprehensive Guide for Current
Statistics of the RBI Monthly Bulletin (https://rbi.org.in/Scripts/PublicationsView.aspx?id=17618)

Time series data of ‘Current Statistics’ is available at https://dbie.rbi.org.in.

Detailed explanatory notes are available in the relevant press releases issued by RBI and other publications/releases
of the Bank such as Handbook of Statistics on the Indian Economy.

RBI Bulletin January 2024 199

RECENT PUBLICATIONS

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Notes
1. Many of the above publications are available at the RBI website (www.rbi.org.in).
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200 RBI Bulletin January 2024

 RECENT PUBLICATIONS

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RBI Bulletin January 2024 201