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Re: Credit Cards......
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Arrow Re: Credit Cards...... - April 28th, 2007

Give YV credit: Borrowing dips

The measures taken by RBI to curtail credit growth seem to have worked. Combined credit growth for January and February — a period during which credit picks up every year — is equivalent to the credit growth for December. However, deposits have almost doubled in the comparable period.

According to data released by RBI, the combined credit for January and February stood at Rs 80,059 crore, against Rs 82,615 crore reported for December 2006 alone.

RBI hiked repo rate by 25 basis points to 7.5% on January 31 and subsequently raised the CRR by 50 bps to 6%.

Although the banking system saw a slowdown in credit in the first fortnight of the fourth quarter beginning January, it picked up subsequently. On a fortnightly basis, credit rose by Rs 33,078 crore to Rs 18,46,403 crore as on March 2. In the same period, deposits rose on a fortnightly basis by Rs 42,716 crore to Rs 24,92,854 crore.

The months of January and February reported a deposit growth of nearly Rs 1,04,462 crore, against a December growth of Rs 57,021 crore. The substantial growth in deposits led to higher investments in government securities by banks. It went up by Rs 30,847 crore on fortnightly basis to Rs 8,01,935 crore.

Meanwhile, foreign exchange reserves fell $224 million to $194.410 billion as on March 9. The fall in forex reserves was solely on account of a fall in foreign currency assets to the equivalent level. The value of gold, SDRs and reserve position in the IMF remained unchanged.

As per the updated money supply figures, the total stock money in the system amounted to Rs 31,87,776 crore, up Rs 45,776 crore over the previous fortnight’s levels. However, the second round of CRR hike by the central bank on February 13 seems to have had a limited impact in curtailing money supply. The annual growth in money supply amounted to 22.1%, much higher than the projected level of 15-15.5% for the year by RBI.

While currency with the public and demand deposits rose Rs 1,766 crore and Rs 3,384 crore respectively, term deposits rose Rs 40,366 crore during the fortnight.

In the other developments reported in the WSS, the Centre has refrained from availing ways and means advances (WMA) — a temporary advance to meet its revenue mismatches.
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