CONTENTS

I.

ASSESSMENT AND PROSPECTS

Assessment of 2010-11

Prospects for 2011-12

Reserve Bank’s Perspective on the Medium-term Challenges for the Indian Economy

II.

ECONOMIC REVIEW

The Real Economy

Price Situation

Money and Credit

Financial Markets

Government Finance

External Sector

III.

MONETARY POLICY OPERATIONS

Monetary Policy Operations: Context and Rationale

IV.

CREDIT DELIVERY AND FINANCIAL INCLUSION

Priority Sector Lending

Financial Inclusion

Outreach Activities

V.

DEVELOPMENT AND REGULATION OF FINANCIAL MARKETS

Money Market

Government Securities Market

Foreign Exchange Market

Derivatives Market

VI.

REGULATION, SUPERVISION AND FINANCIAL STABILITY

Financial Stability Assessment

Monitoring of Financial Stability

Assessment of the Banking Sector.

Major Decisions Taken by Board for Financial Supervision

Commercial Banks

Urban Co-operatives Banks

Rural Co-operatives

Deposit Insurance and Credit Guarantee Corporation

Banking Codes and Standards Board of India

Non-Banking Financial Companies

VII.

PUBLIC DEBT MANAGEMENT

Debt Management of Central Government

Debt Management of State Governments

VIII.

CURRENCY MANAGEMENT

Banknotes in Circulation 

Coins in Circulation

Currency Operations

Clean Note Policy

Counterfeit Banknotes

Customer Service

Indigenisation of Paper, Ink and other Raw Materials for Production of Banknotes

Expenditure on Security Printing and Distribution

IX.

PAYMENT AND SETTLEMENT SYSTEMS AND INFORMATION TECHNOLOGY

Oversight of Payment Systems in India

Policy Initiatives

CPSS Initiatives

Information Technology

Information Technology Infrastructure

Information Technology Applications

Policy Initiatives

X.

GOVERNANCE, HUMAN RESOURCES DEVELOPMENT AND ORGANISATIONAL MANAGEMENT

Initiatives for Improved Governance

Initiatives for Improved Communication

Human Resource Development Initiatives

Initiatives in Organisation Management

XI.

THE RESERVE BANK’S ACCOUNTS FOR 2010-11

Income 

Expenditure

Balance Sheet

Significant Accounting Policies and Notes to the Accounts for the Year 2010-11

Annex I : List of Speeches by Governor and Deputy Governors: April 2010 to August 2011

Annex II : Visits of Foreign Delegations to the Reserve Bank of India during July 01, 2010 to June 30, 2011

INDEX OF APPENDIX TABLES

1. Macroeconomic and Financial Indicators 

2. Growth Rates and Sectoral Composition of Real Gross Domestic Product

3. Gross Domestic Saving and Investment

4. Financial Saving of the Household Sector (Gross)

5. Agricultural Production

6. Procurement, Off-Take and Stocks of Foodgrains

7. Trends in Index of Industrial Production

8. Variations in Index Numbers of Wholesale Prices 

9. Variations in Reserve Money

10. Variations in Money Stock

11. Sectoral Deployment of Gross Bank Credit

12. Capital Market - Primary and Secondary

13. Turnover in Indian Derivatives Market 

14. Indices of Real Effective Exchange Rate (REER) and Nominal Effective Exchange Rate (NEER) of the Indian Rupee

15. Key Fiscal Indicators

16. Budgetary Operations of the State Governments

17. India's Exports and Imports 

18. India's Overall Balance of Payments

19. Foreign Direct Investment Flows to India: Country-wise and Industry-wise

20. India's Foreign Exchange Reserves

21. India's External Debt (As at end-March)

BOXES

II.1 Would Firming Oil Prices Cringe Growth?

II.2 Food Management – What Needs to Improve? 

II.3 Transmission of Global Commodity Price Shocks to Domestic Inflation 

II.4 Growth Inflation Trade-off and Threshold Inflation

II.5 Towards Better Price Statistics

II.6 Determinants of Currency Demand – What Caused the Shift in Trend?

II.7 Short-run Shocks to Money Velocity and the Behaviour of Money Growth  

II.8 Financial Derivatives in India - Current Status

II.9 Trends in Non-Bank Financing- Is the Financial System still Bank Dominant?

II.10 Impact of Financial Market Developments on Financial Soundness Indicators of the Banking System

II.11 Infrastructure Financing

II.12 Revenue and Expenditure Reforms – Improving the Fiscal Environment for Robust and Inclusive Growth

II.13 Fiscal Indicators in a Rule-based Framework: Cross-country Survey

II.14 Fiscal Multiplier: A Cross-Country Experience

II.15 Recommendations of Committee on the Comprehensive Review of the NSSF

II.16 Has Increasing Globalisation Limited the Effectiveness of National Policies in India?

II.17 India’s Threshold level of Sustainable Current Account Deficit

II.18 Interest Rate Sensitivity of Capital Flows to India

II.19 Equilibrium Exchange Rate

III.1 Monetary Policy Transmission after the Switchover to Base Rate

III.2 Changes in Operating Procedure of Monetary Policy

IV.1 Financial Inclusion and Inclusive Growth: What the Empirical Evidence Suggests?

IV.2 Committee on the MFI Sector (Malegam Committee)

V.1 Guidelines on Credit Default Swaps (CDS) for Corporate Bonds

V.2 NDF Market and its Implication for the Domestic Financial Markets

VI.1 Financial Stability Board (FSB)

VI.2 Developments related to FSDC and its Sub-Committee

VI.3 Corporate and Household Leverage, Credit Cycle and Economic Growth

VI.4 Initiatives taken by the Reserve Bank to migrate towards the Basel III norms

VI.5 Expert Committee on Licensing of New Urban Cooperative Banks

VI.6 Regulatory Framework for Core Investment Companies (CICs)  

VII.1 Developments in RBI’s role as Banker to Government

VIII.1 Procedure for Dealing with Counterfeit Currency.

IX.1 Interdependencies in Payment Systems.

IX.2 IT Vision Document: 2011-2017

IX.3 Information Technology as a Vehicle for Data Dissemination

X.1 Governance Framework in the Reserve Bank  

X.2 Knowledge Initiative

CHARTS

II.1 Real GDP Growth

II.2 Saving and Investment (Per cent of GDP at current market prices)

II.3 Household Financial Savings

II.4 Comparative Yield: India and the World

II.5 2010-11 Yield Differential – State-wise

II.6 Monsoon and Agriculture

II.7 Growth in IIP (Y-o-Y)

II.8 Industrial Growth

II.9 Components of Aggregate Demand and Related Industry Growth Trends

II.10 Growth in Infrastructure Industries.

II.11 Growth in Services Sector GDP

II.12 Growth Trend in Cargo Movements

II.13 Growth in services (excluding community, social and personal services)

II.14 Expenditure Side of GDP

II.15 Changing Weighted Contributions to Increase in WPI

II.16 Trends in Wholesale Price Inflation

II.17 Contribution to Inflation: Major Groups 

II.18 Trends in Food Inflation

II.19 Global and Domestic Fuel Inflation (Y-o-Y)

II.20 Manufactured Products Inflation

II.21 International Commodity Prices

II.22 CPI and WPI Inflation (Y-o-Y)

II.23 Trends in GDP Growth and Inflation

II.24 Growth in Reserve Money

II.25 Important Sources of Variation in Reserve Money

II.26 Liquidity Management Operations

II.27 Money and Deposit Growth

II.28 Variations in M₃ in ` crore and per cent share of Major Components of M₃ in the Variation

II.29 Non-food Credit Growth (Y-o-Y, per cent)

II.30 Share of Various Sub-sectors in Incremental Industrial Credit Flow

II.31 Aggregate Deposits and Bank Credit of SCBs

II.32 Flow of Financial Resources to the Commercial Sector

II.33 Indicators of Global Financial Market Developments

II.34 Transmission of Policy Rates to Financial Markets.

II.35 Movement in Government Securities Yield Curve

II.36 Activities in Domestic Financial Markets

II.37 Volatility in the Indian Financial Markets

II.38 Movement in Equity Markets

II.39 Activity in Financial Derivatives Market

II.40 Movement in Housing Prices and Transactions

II.41 Exchange Rate and Forward Premia

II.42 Key Deficit Indicators

II.43 Subsidies of Central Government

II.44 Key Global Indicators

II.45 India’s External Trade

II.46 Year-on-Year Export Growth of India vis-a-vis AEs and EMEs

II.47 Exports and Imports of Major Commodities

II.48 Performance of India's Invisibles

II.49 Trends in the Major Components of Balance of Payments

II.50 Trends in Major Components of Capital Flows (Net)

II.51 Country-wise FDI Inflows

II.52 Industry-wise FDI Flows

II.53 Exchange Rate flexibility in India

II.54 Movements of Indian Rupee against US Dollar and Euro

II.55 External Debt Indicators

III.1 Repo (+)/Reverse Repo (-) under LAF

III.2 Outstandings under LAF and GoI Balance

VI.1 Soundness Indicators on SCBs

VII.1 Cash Balance of the Central Government

VIII.1 Cost of Security Printing

IX.1 Share of Paper Based Vs Electronic Transaction

X.1 Total Staff Strength of the Reserve Bank

TEXT TABLES

III.1 Movements in Key Policy Rates and Reserve Requirements in India  

III.2 Monetary Policy Reviews

III.3 Liquidity Management Measures taken by the Reserve Bank in 2010-11

IV.1 Priority Sector Advances

IV.2 Disbursements under SACP by Public Sector Banks  

IV.3 Recovery of Direct Agricultural Advances

IV.4 Compensation of lending institutions under Agricultural Debt Waiver and Debt Relief Scheme, 2008

IV.5 Credit to MSE Sector by SCBs

VI.1 Select Financial Indicators

VII.1 Gross and Net Market Borrowings of the Central Government

VII.2 Central Government’s Market Loans - A Profile

VII.3 Issuance of GoI Dated Securities - Maturity Pattern

VII.4 States’ Market Borrowings

VII.5 Residual Maturity Profile of Outstanding State Development Loans and Power Bonds (as at end-March 2011)

VII.6 Yield on State Government Securities

VII.7 WMA/OD of State Governments (Average monthly outstanding)

VII.8 No. of Days States Availed of Special/Normal WMA and OD

VII.9 Investments of the State Governments/UT

VIII.1 Banknotes in Circulation

VIII.2 Coins in Circulation

VIII.3 Currency Chests and Small Coin Depots

VIII.4 Indent and Supply of Banknotes (April –March)

VIII.5 Indent and Supply of Coins

VIII.6 Disposal of Soiled Notes and Supply of Fresh Banknotes

VIII.7 Counterfeit Notes Detected

IX.1 Payment System Indicators - Annual Turnover

X.1 Reserve Bank Training Establishments - Programmes Conducted

X.2 Number of Officers Trained in External Training Institutions in India and Abroad

X.3 Recruitment by the Reserve Bank – 2010

X.4 Staff Strength of the Reserve Bank

X.5 Category-wise Staff Strength

X.6 Reserve Bank’s Office-wise Strength of Staff

XI.1 Gross Income

XI.2 Earnings from Foreign Sources

XI.3 Earnings from Domestic Sources

XI.4 Expenditure

XI.5 Trends in Gross Income, Expenditure and Net Disposable Income

XI.6 Contingency and Asset Development Reserves and Surplus Transfer to the Government

XI.7 Balances in Currency and Gold Revaluation Account (CGRA), Exchange Equalisation Account (EEA) and Investment Revaluation Account (IRA)

XI.8 Balances in Contingency Reserve and Asset Development Reserve

XI.9 Outstanding Foreign Currency and Domestic Assets

XI.10 Foreign Exchange Reserves

XI.11 Investments in Shares of Subsidiaries/Associate Institutions