ANNEX : MONEY STOCK MEASURES : EVOLUTION OF METHODOLOGY OF COMPILATION

First Working Group
(FWG) (1961)

Second Working Group
(SWG) (1977)

Working Group on Money
Supply (WGMS) (1998)

REMARKS

1

2

3

4

COMPONENTS (C)

C.I. Currency with the Public
(C.I.1+C.I.2-C.I.3-C.I.4-C.I.5)

C.I. Currency with the Public
(C.I.1+C.I.2-C.I.3-C.I.4)

C.I. Currency with the Public
(C.I.1+C.I.2-C.I.3)

C.I.1 Notes in circulation

C.I.1 Notes in circulation

C.I.1 Notes in circulation

C.I.2 Circulation of Rupee coins and small coins i.e., Government’s currency liabilities to the Public

C.I.2
Circulation of Rupee coins and small coins i.e. , Government’s currency liabilities to the Public

C.I.2 Circulation of Rupee coins and small coins i.e., Government’s currency liabilities to the Public

Comprise rupee coins and small coins. Ten-rupee coins issued since October 1969, two rupee-coins issued since November 1982 and five rupee coins issued since November 1985 are included under rupee coins. Net of return of Indian notes from Pakistan.

C.I.3 Currency returned by Pakistan

C.I.3 Currency returned by Pakistan

C.I.4 Cash on hand with banks i.e., commercial banks and state co- operative banks

C.I.4 Cash on hand with the banking system i.e., commercial banks, state co-operative banks, central co-operative banks and primary co-operative banks

C.I.3 Cash on hand with the banking system

The FWG considered only commercial and state co- operative banks while the SWG extended the coverage to central co-operative banks and primary co-operative banks consisting of urban co-operative banks and salary earners’ societies.

C.I.5 Balance of the Central and State Governments held at treasuries

Since August 1967, no adjustment has been made in regard to balances held at treasures in view of their meagre amounts.

C.II. Aggregate Deposits with Banks (C.II.1+C.II.2)

C.II. Aggregate Deposits with the Banking System (C.II.1+C.II.2)

C.II. Aggregate Deposits held by Residents with the Banking ystem (CII.1+C.II.2-C.II.2.2.1-C.II.2.3.1)

With the inclusion of central and urban co-operative banks, the SWG treated inter-bank deposits with the banking system as part of net non-monetary liabilities [i.e., other items (net) as defined by the Working Group on Money Supply (WGMS): Analytics and Methodology Compilation (Chairman: Dr. Y. V. Reddy)]. The WGMS recommended that aggregate deposits should be on residency basis, thereby excluding repatriable foreign currency fixed deposits held by non- residents, e.g., FCNR(B) deposits, from money supply.

C.II.1 Demand Deposits with banks(including inter-bank demand deposits with state co-operative banks)

C.II.1 Demand Deposits with the banking system.

C.II.1 Demand Deposits with the banking system.

C.II.2 Time Deposits with banks (including inter-bank time deposits with state co-operative banks)

C.II.2 Time Deposits with the banking system.

C.II.2 Time Deposits held by Residents with the banking system. (CII.2.1+C.II.2.2+ C.II.2.3) C.II.2.1 Certificates of Deposit (CDs)
C.II.2.2 Short-term1 time deposits
C.II.2.2.1 Foreign Currency Repatriable short-term1
‘Fixed Deposits held by Non-Residents

The WGMS recommended a break-up of time deposits into CDs and other time deposits on the basis of maturity structure partitioned at one year.

(Continued)

ANNEX : MONEY STOCK MEASURES : EVOLUTION OF METHODOLOGY OF COMPILATION (Contd.)

First Working Group
(FWG) (1961)

Second Working Group
(SWG) (1977)

Working Group on Money
Supply (WGMS) (1998)

REMARKS

1

2

3

4

C.II.2.3 Long-term2 time deposits
C.II.2.3.1 Foreign Currency Repatriable long-term2 Fixed Deposits held by Non-Residents C.II.3 Savings Accounts C.II.3.1 Time Liabilities portion of Savings Accounts

C.III. ‘Other’ deposits with the RBI (C.III.1-C.III.2)

C.III. ‘Other’ deposits with the RBI
(C.III.1-C.III.2-C.III.3-C.III.4-C.III.5)

C.III. ‘Other’ deposits with the RBI (C.III.1-C.III.2-C.III.3-C.III.4-C.III.5)

C.III.1 Other Deposits with the RBI

C.III.1 Other Deposits with the RBI

C.III.1 Other Deposits with the RBI

C.III.2 IMF Deposits with RBI in Account No. 1

C.III.2 IMF Deposits with
RBI in Account No. 1

C.III.2 IMF Deposits with RBI in Account No. 1

C.III.3 RBI Employees’ Pension/ Provident/Co-operative Guarantee Funds

C.III.3 RBI Employees’ Pension/ Provident/Co-operative Guarantee Funds

Balances under Reserve Bank Employees’ Pension/Provident and Co-operative Guarantee Funds have been excluded from money supply since January 1964.

C.III.4 Compulsory Deposits with RBI

C.III.4 Compulsory Deposits with RBI

Balances under Additional Emoluments (Compulsory Deposits) Act 1974 and the Compulsory Deposit Scheme (Income Tax Payers) Act were excluded from money supply effective August 16, 1974 and December 13, 1974, respectively.

C.III.5 Profits of the RBI held temporarily under other deposits and subscriptions to state governments’ loans pending allotment

C.III.5 Profits of the RBI held temporarily under other deposits and subscriptions to state governments’ loans pending allotment

C.IV. Post Office Total Deposits
C.IV.1 Post Office Savings Deposits

C.IV. Post Office Total Deposits
C.IV.1 Post Office Savings Deposits

Post Office Deposits were included in the monetary aggregates by the SWG. The WGMS recommended that these should be part of liquidity aggregates.

C.V. Call/Term Money Borrowings by Scheduled Commercial Banks from non-bank sources (excluding PDs)

Borrowings represent money at call and short notice obtained from outside the banking system, but exclude refinance from RBI and financial institutions.

C.IV. Money Supply with the Public (=C.I+C.II.1+C.III)

C.V. Narrow Money (M1) (=C.I+C.II.1+C.III)

C.VI. Narrow Money (M1) (=C.I+C.II.1+C.III)

There is a break in the M1 series following the reclassification of demand and time components of savings accounts vide circular DBOD.No.Ref.BC.127/C-96(Ret)- 77 dated October 15, 1977.

C.VI. (=C.V.+C.IV.1) M2

C.VII. M2 (=C.VI+C.II.2.1+C.II.2.2- C.II.2.2.1+ C.II.3.1)

C.V. Aggregate Monetary Resources (=C.IV+C.II.2)

C.VII. Broad Money (M3) (=C.V+C.II.2)

C.VIII. Broad Money (M3) (=C.VII+C.II.2.3-C.II.2.3.1+C.V)

Data on aggregate monetary resources proposed by the FWG were first published in the Bank’s Annual Report 1964-65 and in the Report on Currency and Finance1967-68.

ANNEX : MONEY STOCK MEASURES : EVOLUTION OF
METHODOLOGY OF COMPILATION (Contd.)

First Working Group
(FWG) (1961)

Second Working Group
(SWG) (1977)

Working Group on
Money
Supply (WGMS) (1998)

REMARKS

1

2

3

4

C.VIII.  (=C.IV+C.VII.) M4

C.IX. L1 (=C.IV+C.VIII)

C.X. Term Deposits of
Financial Institutions
(FIs) C.XI.
Certificates of
Deposit issued by FIs
C.XII. Term
Borrrowings
by FIs C.XIII. L2
(=C.IX +C.X+ C.XI +C.XII)

Includes IDBI,
ICICI, IFCI,
IIBI, EXIM Bank,
TFCI, NABARD,
SIDBI and NHB.

C.XIV. Public Deposits by
Non- Banking Financial
Companies (NBFCs)

Includes NBFCs
having public deposits
of Rs. 20 crore or above.

C.XV. L3
(=C.XIII + C.XIV)

SOURCES (S)

S.I Net Bank Credit to
Government Sector
(S.I.1+S.I.2)

S.I Net Bank Credit to
Government Sector (S.I.1+S.I.2)

S.I Net Bank Credit to
Government (S.I.1+S.I.2)

S.I.1 Net RBI Credit to
Government Sector (S.I.1.1+S.I.1.2+S.I.1.3+
S.I.1.4+S.I.1.5- S.I.1.6+
S.I.1.7-S.I.1.8)

S.I.1 Net RBI Credit to
Government Sector
(S.I.1.1+S.I.1.2)

S.I.1 Net RBI Credit to
Government
(S.I.1.1+S.I.1.2)

S.I.1.1 Net RBI Credit
to the Central Government
(S.I.1.1.1+
S.I.1.1.2+S.I.1.1.3+
S.I.1.1.4+S.I.1.1.5-S.I.1.1.6)

S.I.1.1 Net RBI Credit to
Central Government (S.I.1.1.1+S.I.1.1..2+S.I.1.1.3+
S.I.1.1.4+S.I.1.1.5-S.I.1.1.6)

S.I.1.1 Loans and
Advances to the
Central Government

S.I.1.1.1 Loans and
Advances to the
Central Government

S.I.1.1.1 Loans and
Advances to the
Central Government

S.I.1.2 Bills Purchased and Discounted

S.I.1.1.2 Bills Purchased
and Discounted

S.I.1.1.2 Bills Purchased and
Discounted

S.I.1.3 Investments in
Treasury Bills

S.I.1.1.3 Investments in
Treasury Bills

S.I.1.1.3 Investments in
short-term1
Central Government securities

S.I.1.4 Investments in
Government of India Securities

S.I.1.1.4 Investments
in Central Government
Securities

S.I.1.1.4 Investments in long-term2
Central Government Securities

S.I.1.5 Rupee coins held
by the RBI S.I.1.6
Deposits of the Central
Government with the RBI

S.I.1.1.5 Rupee coins held
by the RBI S.I.1.1.6
Deposits of the Central
Government with the RBI

S.I.1.1.5 Rupee
coins held by the
RBI S.I.1.1.6
Deposits of the
Central Government
with the RBI

S.I.1.2 Net RBI
credit to the State
Government
(S.I.1.2.1-S.1.2.2)

S.I.1.2 Net RBI credit to the
State Government
(S.I.1.2.1-S.I.1.2.2)

S.I.1.7 Loans and
Advances to State
Governments

S.I.1.2.1 Loans and
Advances to State
Governments

S.I.1.2.1 Loans and
Advances to State
Governments

S.I.1.8 Deposits of
State Governments

S.I.1.2.2 Deposits of State Governments

S.I.1.2.2 Deposits of
State Governments

S.I.2 Other Banks’ credit
to Government
(S.I.2.1+S.I.2.2)

S.I.2 Other Banks’
credit to Government (=S.I.2.1)

S.I.2 Credit to
Government by the
Banking System
(S.I.2.1+S.I.2.2)

S.I.2.1 Other Banks’
investments in
Government securities

S.I.2.1 Other Banks’ investments in
Government securities

S.I.2.1 Investments in
short-term Government
securities by the
Banking System

Treasury Bills are to be valued at carrying cost.

ANNEX : MONEY STOCK MEASURES : EVOLUTION OF METHODOLOGY OF COMPILATION (Contd.)

First Working Group
(FWG) (1961)

Second Working Group (SWG) (1977)

Working Group on Money Supply (WGMS) (1998)

REMARKS

1

2

3

4

S.I.2.2 Investments in
long-term2 Government
securities by the Banking System

S.I.2.2 Government’s Currency Liabilities to the Public adjusted for balances in treasuries

Government’s currency liabilities to the Public were carved out as an independent source of money stock in October 1962.

S.II. Total Bank Credit to Private Sector (S.II.1+S.II.2)

S.II. Total Bank
Credit to Commercial Sector (S.II.1+S.II.2)

S.II. Bank Credit to Commercial Sector (S.II.1+S.II.2)

The nomenclature “private sector” was changed into “commercial sector” in 1970, as bank credit included credit given to commercial/ manufacturing enterprises in the public sector too.

S.II.1 RBI Credit to Private Sector(S.II.1.1+S.II.1.2)

S.II.1 RBI Credit
to Commercial Sector (S.II.1.1+S.II.1.2+S.II.1.3)

S.II.1 RBI Credit to
Commercial Sector (S.II.1.1+S.II.1.2+S.II.1.3)

S.II.1.1 RBI’s investments in shares/ bonds of financial institutions, ordinary debentures of co-operative sectors, Central Land Mortgage Bank (CLMB) debentures etc.

S.II.1.1 RBI’s
investments in shares/bonds
of financial institutions, ordinary debentures of co-operative
sectors,
CLMB debentures etc.

S.II.1.1 RBI’s investments
in shares/ bonds of financial institutions, ordinary
debentures of co-operative
sectors, CLMB debentures etc.

S.II.1.2 Loans to financial institutions

S.II.1.2 Loans to
financial institutions

S.II.1.2 Loans to
financial institutions

On the establishment of
National Bank for Agriculture
and Rural Development (NABARD) on July12, 1982, certain assets and liabilities of the RBI were transferred to
NABARD, necessitating some reclassification of aggregates on the sources side of money stock since that date. The WGMS recommended the reclassification of the RBI’s refinance to NABARD as credit to commercial sector rather than as claims on banks as had been the practice hitherto.

S.II.1.3 Internal Bills
(under Bills
Rediscounting Scheme)

S.II.1.3 Internal Bills
(under Bills
Rediscounting Scheme)

With the introduction of the Bills Rediscounting Scheme, the commercial banks started discounting the internal bills with the RBI which have been included in the RBI credit to commercial sector since June 1971.

S.II.2 Other Banks’ net credit to Private Sector (S.II.2.1+S.II.2.2-S.II.2.3-S.II.2.4- S.II.2.5) S.II.2.1 Bank Credit

S.II.2 Other Banks
credit to Commercial Sector (S.II.2.1+S.II.2.2) S.II.2.1 Bank Credit

S.II.2 Credit to the
Commercial Sector
by the Banking System (S.II.2.1+S.II.2.2+
S.II.2.3+S.II.2.4) S.II.2.1
Bank Credit

Includes loans, cash credit and overdrafts and internal and foreign bills purchased and discounted.

S.II.2.2 Other Investments

S.II.2.2 Other Investments

S.II.2.2 Investments in
other Approved Securities

S.II.2.3 Other Investments

Include investments in securities which are not approved for maintenance of statutory liquidity ratio (SLR) such as Commercial Papers, units of UTI and mutual funds and shares/debentures/

ANNEX : MONEY STOCK MEASURES : EVOLUTION OF
METHODOLOGY OF COMPILATION (Contd.)

First Working Group
(FWG) (1961)

Second Working Group (SWG) (1977)

Working Group on Money Supply
(WGMS) (1998)

REMARKS

1

2

3

4

bonds of the public and private non-bank sector..

S.II.2.3. Net inter-bank Liabilities

As data for central and primary co- operative banks were not included in money supply, the FWG had adjusted bank credit for net inter- bank liabilities.  These were, however,  treated as part of net non-monetary liabilities by the SWG on extension of full coverage to the co-operative sector

S.II.2.4 Loans from financial institutions

The FWG had adjusted bank credit against loans from select financial institutions which received refinance from the RBI which had already been reckoned in the RBI credit to the commercial sector. The SWG did away with this adjustment as it was argued that these FIs had substantial access to sources of funds other than those from the RBI.

S.II.2.4 Net
lending to Primary Dealers

Banks’ net lendings to PDs, net of their call borrowings from PDs, are part of net inter-bank assets under the present reporting format. However, as the banking sector in money supply excludes PDs, this item was included as part of credit from the banking system by the WGMS.

S.II.2.5 Time deposits held by Banks (including inter-bank time deposits held by state co-operative banks)

This adjustment was considered necessary since the FWG was concerned with M 1. The presentation of data on bank credit to commercial sector on net basis was changed into gross basis in May 1974, as (i) time deposits are used not only for financing bank credit to commercial sector but also for lending to the Government and(ii) these are not owned by commercial enterprises who largely borrow from banks.

S.III Net Foreign Exchange Assets of the Banking Sector (S.III.1+S.III.2)

S.III Net Foreign Exchange Assets of the Banking Sector (S.III.1+S.III.2)

S.III Net Foreign Exchange Assets of the Banking Sector (S.III.1+S.III.2)

S.III.1 Net Foreign Exchange Assets of the RBI (S.III.1.1+S.III.1.2+S.III.1.3- S.III.1.4-S.III.1.5)

S.III.1 Net Foreign Exchange Assets of the RBI (S.III.1.1+S.III.1.2+S.III.1.3- S.III.1.4-S.III.1.5)

S.III.1 Net Foreign Exchange Assets of the RBI (S . I I I . 1. 1 + S . I I
I . 1 . 2 - S.III.1.3+S.III.1.4)

S.III.1.1 Gold Coin and Bullion

S.III.1.1 Gold Coin and Bullion

S.III.1.1 Gold Coin and Bullion

Inclusive of valuation of Gold following its revaluation close to international market price effective October 17, 1990. Such revaluation has a corresponding effect on Reserve Bank’s net non-monetary liabilities (capital account)

ANNEX : MONEY STOCK MEASURES : EVOLUTION OF METHODOLOGY OF COMPILATION (Contd.)

First Working Group
(FWG) (1961)

Second Working Group
(SWG) (1977)

Working Group on Money Supply
(WGMS) (1998)

REMARKS

1

2

3

4

S.III.1.2 Foreign Currency Assets of the RBI (S.III.1.2.1+S.III.1.2.2)

Since July 1996, foreign currency assets are being valued at the exchange rate prevailing at the end of every week. Such revaluation has a corresponding effect on Reserve Bank’s net non-monetary liabilities (capital account).

S.III.1.2 Foreign Securities

S.III.1.2 Foreign Securities

S.III.1.2 Foreign Securities

Certain foreign securities e.g., IBRD shares,
Commonwealth bonds etc. which were part of RBI’s claims on Government were reclassified as part of its foreign assets by the SWG.

S.III.1.3 Balances held abroad

S.III.1.3 Balances held abroad

S.III.1.2.2 Balances held abroad

S.III.1.4 IMF A/c No.1

S.III.1.4 IMF A/c No.1

S.III.1.3 IMF A/c No.1

S.III.1.5 Special Currency withdrawn from Gulf States held under Other deposits of the RBI if any.

S.III.1.5 Quota subscription in rupees.

S.III.1.4 Quota subscription in rupees.

S.III.2 Net Foreign Exchange Assets of Banking System

S.III.2 Net
Foreign Exchange Assets of Banking System (Authorised Dealers’ Balances)

S.III.2 Net Foreign Currency Assets of Banking System (S.III.2.1-S.III.2.2-S.III.2.3)

S.III.2.1 Foreign Currency Assets of the Banking System

Includes balances held abroad (i.e., the cash component of nostro accounts, etc.)
and investments in eligible foreign securities and bonds.

S.III.2.2. Overseas Borrowings of the Banking System

S.III.2.3 Non-Resident Repatriable Foreign Currency Fixed Deposits with the Banking System (C.II.2.2.1+C.II.2.3.1)

S.IV. Government’s Currency Liabilities to the Public

S.IV. Government’s
Currency Liabilities to the Public

Net of Indian currency returned by Pakistan awaiting adjustment.

S.IV. Net non-monetary Liabilities of the Banking Sector (S.IV.1+S.IV.2)

S.V. Net non-monetary Liabilities of the Banking Sector (S.V.1+S.V.2)

S.V. Capital Account of the Banking Sector (S.V.1+S.VI.2)

The WGMS has bifurcated the non-monetary liabilities of the banking sector into
the capital account and other items (net).

S.IV.1 Net non-monetary Liabilities of the RBI (S.IV.1.1+S.IV.1.2+ S.IV.1.3+S.IV.1.4+S.IV.1.5- S.IV.1.6+S.IV.1.7)

S.V.1 Net non-monetary
Liabilities of the RBI
(S.V.1.1+S.V.1.2+
S.V.1.3+S.V.1.4+
S.V.1.5+S.V.1.6+S.V.1.7+
S.V.1.8- S.V.1.9)

S.V.1 Capital Account of the RBI (S.V.1.1+S.V.1.2+ S.V.1.3+ S.V.1.4+ S.V.1.5+S.V.1.6)

S.IV.1.1 Paid-up Capital

S.V.1.1 Paid-up Capital

S.V.1.1 Paid-up Capital

S.IV.1.2 Reserves

S.V.1.2 Reserves

S.V.1.2 Reserves

S.IV.1.3 Contributions to National Funds

S.V.1.3 Contributions to
National Funds

S.V.1.3 Contingency Reserves

S.IV.1.4 Bills Payable

S.V.1.4 RBI Employees’ Pensions/Provident/Guarantee Funds

S.V.1.4 Exchange Fluctuation Reserve / Currency and Gold Revaluation Account

ANNEX : MONEY STOCK MEASURES : EVOLUTION OF
METHODOLOGY OF COMPILATION (Concld.)

First Working Group

Second Working Group

Working Group
on Money

REMARKS

(FWG) (1961)

(SWG) (1977)

Supply (WGMS) (1998)

1

2

3

4

S.IV.1.5 Other
Liabilities

S.V.1.5 Compulsory
Deposits with the RBI

S.V.1.5 Exchange
Equalisation Account

S.IV.1.6 Other
Assets net of
Gold in Banking
Department

S.V.1.6 Bills Payable

S.V.1.6 Contributions to
National Funds

S.IV.1.7 Indian
currency returned
by Pakistan awaiting adjustment

S.V.1.7 Other
Libabilities S.V.1.8
IMF Quota Subscription
and other payments in
rupees included in IMF
A/c No. 1 S.V.1.9 Other
Assets net of Gold
in Banking department

S.V.2 Capital
Account of the
Banking System
(S.V.2.1+S.V.2.2)
S.V.2.1 Paid-up Capital
S.V.2.2 Reserves

S.IV.2
Non-identifiable net
non- monetary
liabilities of other
Banks (residual)

S.V.2 Net non-monetary
liabilities of the Banking
System (residual)

S.VI. Other items (net) of the
Banking Sector (S.VI.1+S.VI.2)
S.VI.1 Other items
(net) of the RBI (S.VI.1.1+S.VI.1.2+
S.VI.1.3+ S.VI.1.4-S.VI.1.5-S.VI.1.6-
S.VI.1.7+ S.VI.1.8- S.VI.1.9)
S.VI.1.1 RBI Employees’
Pensions/ Provdent/Guarantee
Funds S.VI.1.2
Compulsory Deposits
with the RBI S.VI.1.3 Bills
Payable S.VI.1.4 Other Liabilities

S.VI.1.5 Contingency Reserves
S.VI.1.6 Exchange Fluctuation
Reserve / Currency and Gold
Revaluation Account
S.VI. 1.7 Exchange Equalisation
Account S.VI.1.8 IMF Quota
Subscription and other payments
in rupees included in IMF A/c No. 1
S.VI.1.9 Other Assets net of Gold in
Banking department
S.VI.2  Other items (net) of the
Banking System (residual)

Excludes contingency
reserve, exchange
fluctuation
reserve and
exchange equalization
account which
now form part of
capital account and
are, therefore, adjusted.

1Of contractual maturity of one year or less.
2 Of contractual maturity of above one year.
Source : Report of the Working Group on Money Supply : Analytics and Methodology of
Compilation (Chairman : Dr. Y.V. Reddy) (1998), Reserve Bank of India.