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During the current financial year so far, money supply or M3 (up to January 4, 2008) increased by Rs.4,40,056 crore (13.3 per cent) which was higher than the increase of Rs.3,33,864 crore (12.2 per cent) in the corresponding period of the previous year and reflected the sizeable deposit mobilisation by banks, including shifts out of small savings schemes of the Government. M3 increased by 22.4 per cent on a year-on-year basis, on January 4, 2008 which was higher than 20.8 per cent a year ago and well above the projected trajectory of 17.0-17.5 per cent indicated in the Annual Policy Statement for 2007-08.
On a financial year basis, reserve money increased by Rs.1,29,034 crore (18.2 per cent) up to January 18, 2008 as compared with the increase of Rs.68,764 crore (12.0 per cent) in the corresponding period of the previous year. Currency in circulation increased by Rs.61,964 crore (12.3 per cent) as compared with Rs.57,726 crore (13.4 per cent). With the increase in the cash reserve ratio (CRR), bankers' deposits with the Reserve Bank registered a higher growth of Rs.69,760 crore (35.4 per cent) as compared with an increase of Rs.12,319 crore (9.1 per cent) in the corresponding period of the previous year. Among the sources of reserve money, Reserve Bank's net credit to the Central Government declined by Rs.1,57,815 crore as against an increase of Rs.6,963 crore in the corresponding period of the previous year. Adjusted for issuances under the MSS, Reserve Bank's net credit to the Central Government showed a decline of Rs.59,731 crore as compared with an increase of Rs.18,392 crore a year ago and mainly reflected the exchange of collateral securities under the LAF and the changes in the Centre's cash balances (non-MSS) with the Reserve Bank. Due to sustained net capital inflows, the Reserve Bank's net foreign exchange assets (NFEA) increased by Rs.2,51,026 crore as against an increase of Rs.1,14,337 crore during the corresponding period of the previous year. The Reserve Bank's foreign currency assets, adjusted for revaluation, increased by Rs.3,11,941 crore as compared with an increase of Rs.80,166 crore during the corresponding period of the previous year. Reserve money increased by 30.6 per cent on a year-on-year basis as on January 18, 2008 as compared with 20.0 per cent a year ago. Adjusted for the first round effect of the increases in the CRR, reserve money growth was 21.5 per cent as compared with 17.5 per cent a year ago. The ratio of NFEA to currency increased from 171.8 per cent on March 31, 2007 to 197.3 per cent by January 18, 2008.
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