Manual on Financial and Banking Statistics · NR(E)RA Non-Resident (External) Rupee Account...

Manual on Financial and Banking Statistics

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MANUAL ONFINANCIAL AND BANKING STATISTICS

RESERVE BANK OF INDIA

MARCH 2007

Reserve Bank of India has prepared this ‘Manual on Financial and Banking Statistics’ on the

recommendation of the Steering Committee set up by the Ministry of Statistics and Programme

Implementation, Government of India. The objective of this reference manual is to provide a

methodological framework for compilation of statistical indicators, encompassing various sectors,

viz., monetary statistics, banking statistics, external sector statistics, fiscal sector statistics, etc.,

published by RBI. The manual is mainly devoted to the primary data compiled within the Bank

following an integrated and uniform approach. This document is expected to facilitate better

understanding of conceptual issues on measurement of statistical indicators on the subject.

Various departments of the Bank and NABARD provided basic inputs for this manual.

Secretarial support for compilation of this voluminous work was undertaken in the Statistical Analysis

Division, Department of Statistical Analysis and Computer Services of the Bank. The efforts of the

officers concerned of the division, under the charge of Shri Radhey Shyam, Adviser, are commendable.

In particular, Dr. Abhiman Das, Assistant Adviser, Ms. Manjusha Senapati, Research Officer and

Shri Joice John, Research Officer, deserve special mention. Dr. K. S. Ramachandra Rao, Principal

Adviser, provided overall guidance to the team for bringing out the publication.

Rakesh Mohan

June 1, 2007 Deputy Governor

FOREWORD


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PART-I – FINANCIAL STATISTICS

I. MONETARY STATISTICS ........................................................................................... 3

Concepts and Definitions ............................................................................................ 3

Coverage ...................................................................................................................... 6

II. BANKING STATISTICS ............................................................................................... 18

Commercial Banks ...................................................................................................... 18

Statutory Returns (Section 42(2) data, Balance sheet, etc.) ....................................... 18

Special Returns ........................................................................................................... 26

Basic Statistical Return 1 ........................................................................................... 27






International Banking Statistics ................................................................................. 43

Branch Banking Statistics .......................................................................................... 53

Other Banking Statistics ............................................................................................. 57

Priority Sector Statistics.............................................................................................. 57

Supervisory Statistics.................................................................................................. 65

Statistics on Interest Rate and Sectoral Deployment of Credit ................................... 71

Data on Interest Rates ................................................................................................ 71

Sectoral Deployment of Credit .................................................................................... 73

Cooperative Banks ...................................................................................................... 74

Regional Rural Banks ................................................................................................. 77

Urban Cooperative Banks ........................................................................................... 79

III. FLOW OF FUNDS ACCOUNT COMPILATION ............................................................ 190

Sectoral Classification of Indian Economy .................................................................. 190

Instruments ................................................................................................................. 191

Sources of Data ........................................................................................................... 193

Methodology of Compilation ........................................................................................ 196

CONTENTS

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PART-II – NON-FINANCIAL STATISTICS

IV. COMPANY FINANACE STATISTICS ........................................................................... 217

Measurement needs of the area .................................................................................. 217

Sources and Systems .................................................................................................. 218

Quality Standard ......................................................................................................... 219

V. EXTERNAL SECTOR STATISTICS ............................................................................ 222

Balance of Payments ................................................................................................... 222

External Debt .............................................................................................................. 226

Foreign Investment Inflows ......................................................................................... 228

NRI Deposits ............................................................................................................... 229

International Investments ........................................................................................... 230

Foreign Exchange Reserves ......................................................................................... 239

REER, NEER ............................................................................................................... 241

Turnover in Forex Market ........................................................................................... 244

Purchase/Sale of Forex by RBI ................................................................................... 245

VI. NON BANKING FINANCIAL COMPANIES .................................................................. 250

Registration ................................................................................................................. 252

Supervision ................................................................................................................. 253

Policy Developments .................................................................................................... 253

VII. STATISTICS ON GOVERNMENT SECURITIES MARKET ......................................... 262

Liquidity Adjustment Facility- Repo and Reverse Repo .............................................. 264

Treasury Bills .............................................................................................................. 266

Government Security ................................................................................................... 267

VIII. FISCAL SECTOR STATISTICS ................................................................................... 278

Combined Finances ..................................................................................................... 278

State Government Finances ........................................................................................ 278

IX. ESTIMATION OF SEASONAL FACTORS ................................................................... 292

Methodology ................................................................................................................ 292

Forecasting .................................................................................................................. 296


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Annex 2.1 Details of Balance Sheet Items and Notes on Accounts .................................... 81

Banks In India’ .................................................................................................. 90

Annex 2.3 List of Codes Used in BSR 1A and 1B .............................................................. 93

Annex 2.4 Classification of Activity/Occupation ................................................................ 99

Annex 2.5 ISO Currency Codes .......................................................................................... 130

Annex 2.6 Methodology of Compilation of CBS and LBS ................................................... 133

Annex 2.7 Country Information as per ISO Country Code ................................................. 137

Annex 2.8 International Organisations as along with SECTOR CODES ............................ 141

Annex 2.9 Official Monetary Authorities ............................................................................. 144

Annex 2.10 Reporting of Derivatives under IBS ................................................................... 151

Annex 2.11 Proforma I & II ................................................................................................... 155

Annex 2.12 Supervisory Data Published in RBI Publications .............................................. 171

Annex 2.13 Part I- Cooperative Credit and Cooperative Non-Credit Societies ...................... 172

Annex 2.14 Contents of Publication of Statistics on RRBs .................................................. 184

Annex 2.15 Urban Cooperative Banks: Description of Returns, periodicity

and due date of submission .............................................................................. 186

Annex 3.1 Lists of Cooperative Non-credit Societies ........................................................... 212

Annex 3.2 Lists of Institutions covered under the OFI Sector ........................................... 213

Annex 3.3 Lists of International Institutions ...................................................................... 214

Annex 4.1 Annual Studies and Ad-hoc Publications .......................................................... 220

Annex 4.2 The definitional aspects of various items of assets, liabilities,

income and expenditure of company accounts ................................................. 221

Annex 5.1 International Investment Position: Format as prescribed under

SDDS by IMF ..................................................................................................... 247

Annex 6.1 Details of Returns being received by DNBS as on

January 31, 2007 .............................................................................................. 261

Annex 7.1 Repo/Reverse Repo Auctions under Liquidity Adjustment Facility ................... 269

Annex 7.2 Auctions of Government of India Treasury Bills................................................ 270

Annex 7.3 Details of Central Government Market Borrowings ........................................... 271

Annex 7.4 Turnover of Government Security Market (Face Value) ..................................... 272

Annex 7.5 Glossary ............................................................................................................. 275

Annex 8.1 Key to Budget Documents – Budget 2006-2007 ............................................... 281

Annex 8.2 Budgetary Operations of State Governments- Major Heads .............................. 287

Annex 8.3 Explanatory Notes ............................................................................................. 288

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LIST OF BOXES

2.1 Criteria for Gradation of Urban Cooperative Banks.................................................... 79

6.1 An Overview of Regulation of NBFCs .......................................................................... 251

6.2 Regulatory Norms and Directions for NBFCs .............................................................. 254

LIST OF TEXT TABLES

1.1 Measures of Monetary and Liquid Aggregates ............................................................ 3

1.2 Money Stock Measures: Evolution of Methodology of Compilation ............................. 7

2.1 Coverage of Sector under BSR-4 Return ..................................................................... 37

3.1 Sources of Data for Complilatin of FOF Accounts ...................................................... 193

5.2 Compilation of Guidelines for International Investment Position ............................... 232

5.3 Weighting Pattern for Six- currency Series ................................................................. 243

6.1 Types of Non- Banking Financial Entities (Regulated by RBI) .................................... 252

7.1 Features of Revised Liquidity Adjustment Facility Scheme ........................................ 265

7.2 Treasury Bills- Chronology of Developments .............................................................. 266


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ACF Auto-Correlation Function

AD Authorized Dealer

ADB Asian Development Bank

ADR American Depository Receipt

AFS Annual Financial Statement

AGM Annual General Meeting

AIRCSC All India Rural Credit SurveyCommittee

AO Additive Outliers

AR Auto Regression

ARIMA Auto-Regressive Integrated MovingAverage

AFS Available For Sale

ASSOCHAM Associated Chambers of Commerceand Industry of India

ATM Asynchronous Transfer Mode

ATM Automated Teller Machine

BIS Bank for International Settlements

BOI Bank of India

BoP Balance of Payments

BPM5 Balance of Payments Manual, 5thedition

BPSD Balance of Payments Division,DESACS, RBI

BSCS Basel Committee on BankingSupervision

BSR Basic Statistical Returns

CAD Capital Account Deficit

CAG Controller and Auditor General ofIndia

CBS Consolidated Banking Statistics

CC Cash Credit

CD Certificate of Deposit

CD Ratio Credit Deposit Ratio

CDBS Committee of Direction on BankingStatistics

CF Company Finance

CFRA Combined Finance and RevenueAccounts

CGRA Currency and Gold RevaluationAccount

CII Confederation of Indian Industries

CO Capital Outlay

CP Commercial Paper

CPI Consumer Price Index

CPI-IW Consumer Price Index for IndustrialWorkers

CR Capital Receipts

CRAR Capital to Risk Weighted AssetRatio

CRR Cash Reserve Ratio

CSIR Council of Scientific and IndustrialResearch

CSO Central Statistical Organisation

CVC Central Vigilance Commission

DAP Development Action Plan

DBOD Department of Banking Operationsand Development

DBS Department of BankingSupervision, RBI

DCA Department of Company Affairs,(Now known as Ministry ofCompanies Affairs, MCA)Government of India

LIST OF ABBREVIATIONS

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DCB Demand Collection and Balance

DCCB District Central Cooperative Bank

DCM Department of CurrencyManagement, RBI

DD Demand Draft

DDS Data Dissemination Standards

DEIO Department of External Investmentsand Operations

DESACS Department of Statistical Analysis& Computer Services, RBI

DGBA Department of Government andBank Accounts, RBI

DGCI&S Directorate General of CommercialIntelligence and Statistics

DI Direct Investment

DICGC Deposit Insurance and CreditGuarantee Corporation of India

DID Discharge of Internal Debt

DMA Departmentalized MinistriesAccount

DRI Differntial Rate of Interest Scheme

DSBB Dissemination Standards BulletinBoard

DVP Delivery versus Payment

ECB External Commercial Borrowing

ECB European Central Bank

ECGC Export Credit and GuaranteeCorporation

ECS Electronic Clearing Scheme

EDMU External Debt Management Unit

EEA Exchange Equalization Account

EEC European Economic Community

EEFC Exchange Earners Foreign Currency

EFR Exchange Fluctuation Reserve

EPF Employees Provident Fund

EUR Euro

EXIM Bank Export Import Bank of India

FCA Foreign Currency Assets

FCCB Foreign Currency Convertible Bond

FCNR(B) Foreign Currency Non-resident(Banks)

FCNRA Foreign Currency Non-residentAccount

FCNRD Foreign Currency Non-RepatriableDeposit

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act

FI Financial Institution

FICCI Federation of Indian Chambers ofCommerce and Industry

FII Foreign Institutional Investor

FIMMDA Fixed Income Money Market andDerivatives Association of India

FISIM Financial Intermediation ServicesIndirectly Measured

FLAS Foreign Liabilities and AssetsSurvey

FOF Flow Of Funds

FPI Foreign Portfolio Investment

FRA Forward Rate Agreement

FRBM Fiscal Responsibility and BudgetManagement Act, 2003

FRN Floating Rate Note

FSS Farmers’ Service Societies

FWG First Working Group on Moneysupply


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GDP Gross Domestic Product

GDR Global Depository Receipt

GFD Gross Fiscal Deficit

GFS Government Finance Statistics

GIC General Insurance Corporation

GLS Generalized Least Squares

GNIE Government Not IncludedElsewhere

GoI Government of India

GPD Gross Primary Deficit

G-Sec Government Securities

HDFC Housing Development FinanceCorporation

HFT Held For Trading

HICP Harmonised Index of ConsumerPrices

HO Head Office

HUDCO Housing & Urban DevelopmentCorporation

IBRD International Bank forReconstruction and Development

IBS International Banking Statistics

ICAR Indian Council of AgriculturalResearch

ICICI Industrial Credit and InvestmentCorporation of India

ICMR Indian Council of Medical Research

IDB India Development Bonds

IDBI Industrial Development Bank ofIndia

IDD Industrial Development Department

IFAD International Fund for AgriculturalDevelopment

IFC International Finance Corporation

IFC(W) International Finance Corporation(Washington)

IFCI Industrial Finance Corporation ofIndia

IFR Investment Fluctuation ReserveAccount

IFS International Financial Statistics

IGLS Iterative Generalized Least Squares

IIBI Industrial Investment Bank of India

IIP Index of Industrial Production

IIP/InIP International Investment Position

IMD India Millennium Deposits

IMF International Monetary Fund

IN India

INR Indian Rupee

IOTT Input-Output Transaction Table

IP Interest Payment

IRBI Industrial Reconstruction Bank ofIndia

ISDA International Swaps and DerivativeAssociation

ISIC International Standard IndustrialClassification

ISO International StandardsOrganization

ITRS International Transaction ReportingSystem

IWGEDS International Working Group onExternal Debt Statistics

KVIC Khadi & Village IndustriesCorporation

LAF Liquidity Adjustment Facility

LAMPS Large-sized Adivasi MultipurposeSocieties

Abbreviations

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LAS Loan & Advances by States

LBD Land Development Bank

LBS Locational Banking Statistics

LERMS Liberalised Exchange RateManagement System

LIC Life Insurance Corporation of India

LS Level Shift

LT Long Term

LTO Long Term Operation

M1 Narrow Money

M3 Broad Money

MA Moving Average

MCA Ministry of Company Affairs

MIGA Multilateral Investment GuaranteeAgency

MIS Management Information System

MMSE Minimum Mean Squared Errors

MoF Ministry of Finance

MOF Master Office File

MRM Monitoring and Review Mechanism

MSS Market Stabilisation Scheme

MT Mail Transfer

MTM Mark-To-Market

NABARD National Bank for Agriculture andRural Development

NAC(LTO) National Agricultural Credit (LongTerm Operatiion)

NAIO Non Administratively IndependentOffice

NAS National Account Statistics

NASSCOM National Association of Softwareand Services Companies

NBC Non-Banking Companies

NBFC Non Banking Financial Companies

NEC Not Elsewhere Classified

NEER Nominal Effective Exchange Rate

NFA Non-Foreign Exchange Assets

NFD Net Fiscal Deficit

NGO Non-Governmental Organization

NHB National Housing Bank

NIC National Industrial Classification

NIF Note Issuance Facility

NNML Net Non-Monetary Liabilities

NPA Non-Performing Assets

NPD Net Primary Deficit

NPRB Net Primary Revenue Balance

NPV Net Present Value

NR(E)RA Non-Resident (External) RupeeAccount

NR(NR)RA Non-Resident (Non-Repatriable)Rupee Account

NRE Non-Resident External

NRG Non-Resident Government

NRI Non-Resident Indian

NSC National Statistical Commission

NSSF National Small Savings Fund

OD Over Draft

ODA Official Development Assistance

OECD Organisation for EconomicCooperation and Development

OECO Organisaton for EconomicCo-operation

OFI Other Financial Institutions

OLTAS OnLine Tax Accounting System


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OMO Open Market Operations

OSCB Other Indian ScheduledCommercial Bank

PACF Partial Auto-Correlation Function

PACS Primary Agriculture Credit Societies

PCARDB Primary Cooperative Agricultureand Rural Development Bank

PD Primary Deficit

PDAI Primary Dealers Association ofIndia

PDO Public Debt Office

PDO-NDS Public Debt Office-cum-NegotiatedDealing System

PDs Primary Dealers

PES Public Enterprises Survey

PF Provident Fund

PIO Persons of Indian Origin

PNB Punjab National bank

PO Principal Office

PRB Primary Revenue Balance

PSE Public Sector Enterprises

PUC Paid Up Capital

QRR Quick Review Report

RBI Reserve Bank of India

RD Revenue Deficit

RDBMS Relational Database ManagementSystem

RE Revenue Expenditure

REC Rural Electrification Corporation

REER Real Effective Exchange Rate

RFC Residents Foreign Currency

RIB Resurgent India Bonds

RIDF Rural Infrastructure DevelopmentFund

RLA Recoveries of Loans & Advances

RLC Repayment of Loans to Centre

RMB Renminbi (Chinese)

RNBC Residuary Non-Banking Companies

RO Regional Office

RoCs Registrars of Companies

RPA Rupee Payment Area

RPCD Rural Planning and CreditDepartment, RBI

RR Revenue Receipts

RRB Regional Rural Bank

RTP Reserve Tranche Position

RUF Revolving Underwriting Facility

RWA Risk Weighted Asset

SAM Social Accounting Matrix

SAS Statistical Analysis System

SBI State Bank of India

SC Schedule Caste

SCARDB State Cooperative Agriculture andRural Development Bank

SCB State Cooperative Bank

SCB Scheduled Commercial Bank

SCS Size Class Strata

SDDS Special Data DisseminationStandards

SDR Special Drawing Right

SEBI Securities and Exchange Board ofIndia

SEBs State Electricity Boards

SFC State Financial Corporation

SGL Subsidiary General Ledger

Abbreviations

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SGSY Swarnajayanthi Gram SwarrojgarYojana

SHGs Self-Help Groups

SIDBI Small Industries Development Bankof India

SIDC State Industrial DevelopmentCorporation

SI-SPA Systems Improvement Schemeunder Special Project Agriculture

SJSRY Swarna Jayanti Shahari RojgarYojana

SLR Statutory Liquidity Ratio

SLRS Scheme for Liberation &Rehabilitation of Scavangers

SMG Standing Monitoring Group

SNA System of National Accounts

SRWTO Small road & Water TransportOperators

SSI Small-Scale Industries

SSSBEs Small Scale Service & BusinessEnterprises

ST Schedule Tribe

SWG Second Working Group on MoneySupply

TBs Treasury Bills

TC Temporary Change

TT Telegraphic Transfer

UBB Uniform Balance Book

UBD Urban Banks Department

UCB Urban Cooperative Bank

UCN Uniform Code Number

US United States

USD US Dollars

UTI Unit Trust of India

VC Venture Capital

WGMS Working Group on Money Supply:Analytics and Methodology ofCompilation

WPI Wholesale Price Index

WSS Weekly Statistical Supplement

YTM Yield to Maturity

ZO Zonal Office


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The Ministry of Statistics and Programme Implementation, Government of India, constituted a Steering

Committee in 2005, under the chairmanship of Dr. S. Ray, DG&CEO, NSSO, for preparation of

manuals on various statistical indicators/statistics covering various sectors of the economy. These

manuals are expected to include all relevant information relating to methodological framework for

statistical indicators/statistics to make them a comprehensive reference book. Such documents would

also be ensuring adherence to the prescribed statistical standards and facilitate better understanding

of the statistical indicators by the users. The work of preparing the Manual on Financial and

Banking Statistics was entrusted to Reserve Bank of India (RBI).

As a broad guideline, the Committee decided that the “Manual on Financial and Banking Statistics

shall contain all the relevant details of the existing sources, definitions, methodology adopted, etc.,

relating to all financial transactions in India. A brief working process of the statistics should also be

mentioned in the methodology. The manual should be prepared as per the international standards

as international community would also use this.” However, documentation in the form of a manual

of all financial transactions in India, as envisaged by the Committee, is a daunting task. RBI is not

the primary source of all financial transactions. A lot of data disseminated by RBI is indeed based

on secondary sources. For example, the price statistics published regularly by RBI is based on the

information supplied by the concerned department in the Ministry. A sizable data collected by RBI is

used for statutory/control purposes and is not disseminated to the public domain. Therefore, the

Bank decided to focus exclusively on primary data, including that of National Bank for Agriculture

and Rural Development (NABARD), which are disseminated through various RBI/NABARD publications.

The statistics of other financial institutions, including insurance and mutual funds, are not covered

here. Developments till December 2005 are covered in the manual. The manual is presented in two

parts, separately for Financial Statistics and Non-Financial Statistics, encompassing various sectors,

viz., monetary statistics, banking statistics, external sector statistics, fiscal sector statistics, etc. As

the data disseminated are generated from various sources, a collaborative approach was followed.

In order to present the information in a uniform fashion across manuals, the following guidelines are

followed:

1. Introduction - Historical perspective/development of the statistical system relating to the area

concerned, purpose, changing dimensions, etc.

2. Measurement needs of the area - Significance of the area, measurement needs and indicators.

3. Concepts, Definitions and Classifications - Statistical standards adopted in respect of above

by the primary resources responsible for compiling the indicators/statistics; corresponding

international standards/ UN recommendations and standards, if different from the standards

referred to above, being used by other organization in the country; comments on how the

PREFACE

xvi

standards being used compare with International Standards; reasons which have necessitated

adoption of standards different from international standards or standards adopted by other

national organizations.

4. Sources and Systems - Sources of data, details relating to agencies involved in collection &

compilation of data, organizational structure, delegation of responsibilities and kind of

infrastructure, sampling methodology, frequency and method of data collection, use or possibility

of use of modern technology like GIS, internet, etc., in data collection, title of the Act, if collection

of data is supported by or is byproduct of administration of any Act and enabling provision

therein, penalties for defaulters, etc.

5. Ensuring Quality Standards - Arrangements to ensure adherence to the laid down statistical

standards.

Several departments of RBI, viz., Department of Statistical Analysis and Computer Services (DESACS),

Department of Economic Analysis and Policy (DEAP), Internal Debt Management Department (IDMD),

Department of External Investments and Operations (DEIO), Rural Planning and Credit Department

(RPCD), Department of Banking Supervision (DBS), Department of Non-Banking Supervision (DNBS),

Urban Banks Department (UBD), and Monetary Policy Department (MPD) and NABARD were involved

in providing basic material for the manual. Statistical Analysis Division of DESACS, RBI, provided

the secretarial support for consolidation and preparation of the manual.

1

Monetary Statistics

PART I – FINANCIAL STATISTICS

3

Monetary Statistics

1.1 INTRODUCTION

The Reserve Bank of India has a long traditionof compilation and dissemination of monetarystatistics, since July 1935. In view of theongoing changes in the Indian economy as wellas the developments in monetary sector, workinggroups were set up periodically to review andrefine the monetary aggregates. Three workinggroups were set up so far, viz., the First WorkingGroup on Money Supply (FWG) (1961), theSecond Working Group (SWG) (1977) and the“Working Group on Money Supply: Analytics andMethodology of Compilation” (WGMS) (Chairman:Dr. Y.V. Reddy) (1998). Monetary statistics atpresent are compiled on a balance sheetframework with data drawn from the bankingsector and postal authorities. The rationale andanalytical foundations behind the compilationof monetary aggregates have been provided tothe public through various reports, especiallythrough the reports of the various workinggroups. Monetary aggregates are published ona regular basis in most of the major publicationsof RBI, such as Bank’s Annual Report, Reporton Currency and Finance, Handbook ofStatistics, RBI Bulletin, Weekly StatisticalSupplement, etc.

There is no unique definition of ‘money’, eitheras a concept in economic theory or asmeasured in practice. Money is a means ofpayment and thus a lubricant that facilitatesexchange. Money also acts as a store of valueand a unit of account. In the real world,however, money provides monetary servicesalong with tangible remuneration. It is for thisreason that money has to have relationshipwith the activities that economic entitiespursue. Money can, therefore, be defined forpolicy purposes as the set of liquid financialassets, the variation in the stock of whichcould impact on aggregate economic activity.As a statistical concept, money could includecertain liquid liabilities of a particular set offinancial intermediaries or other issuers. Thus,like other countries, a range of monetary andliquidity measures are compiled in India.

1. MONETARY STATISTICS

1.2. CONCEPTS AND DEFINITIONS

Various monetary and liquidity aggregates arecompiled in India and their definitions are setout Table 1.

Table 1.1: Measures of Monetary andLiquidity Aggregates

Reserve Money = Currency in circulation +Bankers’ deposits with the RBI+ ‘Other’ deposits with the RBI

= Net RBI credit to theGovernment + RBI credit to thecommercial sector + RBI’sclaims on banks + RBI’s netforeign assets + Government’scurrency liabilities to the public– RBI’s net non-monetaryliabilities

M1 = Currency with the public +Demand deposits with thebanking system + ‘Other’deposits with the RBI.

M2 = M1 + Savings deposits of postoffice savings banks

M3 = M1+ Time deposits with thebanking system

= Net bank credit to theGovernment + Bank credit tothe commercial sector + Netforeign exchange assets of thebanking sector + Government’scurrency liabilities to the public– Net non-monetary liabilitiesof the banking sector

M4 = M3 + All deposits with postoffice savings banks (excludingNational Savings Certificates).

NM1 = Currency with the public +Demand deposits with thebanking system + ‘Other’deposits with the RBI.

NM2 = NM1 + Short-term time depositsof residents (including and upto the contractual maturity ofone year).

NM3 = NM2 + Long-term time depositsof residents + Call/Termfunding from financialinstitutions.

4


L1 = NM3 + All deposits with thepost office savings banks(excluding National SavingsCertificates).

L2 = L1 +Term deposits with termlending institutions andrefinancing institutions (FIs) +Term borrowing by FIs +Certificates of deposit issued byFIs.

L3 = L2 + Public deposits of non-banking financial companies.

Net bank credit = Net RBI credit to theto the Government (i.e., Net RBIGovernment Credit to the Centre + Net RBI

Credit to State Governments) +Other banks’ credit to theGovernment

Bank credit to = RBI credit to the commercialthe commercial sector + Other banks’ credit tosector the commercial sector

Net foreign = RBI’s net foreign assets +assets of the Other banks’ foreign assetsbanking sector

Net non- = RBI’s net non-monetarymonetary liabilities + Net non-monetaryliabilities of the liabilities of other banks.banking sector

Various components of monetary and liquidityaggregates are further set out below:

‘Currency in circulation’ includes notes incirculation, rupee coins and small coins. Rupeecoins and small coins in the balance sheet ofthe Reserve Bank of India include ten-rupeecoins issued since October 1969, two rupee-coinsissued since November 1982 and five rupee coinsissued since November 1985. Currency with thepublic is arrived at after deducting cash withbanks from total currency in circulation, asreported by RBI.

‘Bankers’ deposits with the Reserve Bank’represent balances maintained by banks in thecurrent account with the Reserve Bank mainlyfor maintaining Cash Reserve Ratio (CRR) andas working funds for clearing adjustments.‘Other’ Deposits with the Reserve Bank, for thepurpose of monetary compilation, includedeposits from foreign central banks, multilateral

institutions, financial institutions and sundrydeposits net of IMF Account No.1.

‘Net Reserve Bank credit to Government’ includesthe Reserve Bank’s credit to Central as well asState Governments. It includes ways and meansadvances and overdrafts to the Governments, theReserve Bank’s holdings of Governmentsecurities, and the Reserve Bank’s holdings ofrupee coins less deposits of the concernedGovernment with the Reserve Bank. The ReserveBank’s claims on banks include loans to thebanks including NABARD. In case of the newmonetary aggregates, the RBI’s refinance to theNABARD, which was earlier part of RBI’s claimson banks, has been classified as part of RBIcredit to commercial sector.

The ‘Reserve Bank’s credit to the commercialsector’ represents investments in bonds/sharesof financial institutions, loans to them andholdings of internal bills purchased anddiscounted. ‘Government’s currency liabilities tothe public’ comprise rupee coins and small coins.

The Reserve Bank’s net foreign assets are itsholdings of foreign currency assets and gold. Thegold reserves of Issue Department of the ReserveBank were valued at Rs. 21.24 per tola tillOctober 5, 1956; thereafter, at Rs. 62.50 pertola till January 31, 1969 and subsequently atRs. 98.44 per tola (Rs.84.39 per 10 gms) up toOctober 16, 1990. From October 17, 1990 goldis valued at the end of the month at 90 percent of the daily average price quoted at Londonfor the month. The rupee equivalent isdetermined on the basis of exchange rateprevailing on the last business day of the month.Unrealised gains/ losses are adjusted to theCurrency and Gold Revaluation Account (CGRA).The Reserve Bank’s net foreign exchange assetstake into account the impact of appreciation inthe value of gold following its revaluation closeto international market price effective October17, 1990. Such appreciation has a correspondingeffect on Reserve Bank’s net non-monetaryliabilities.

‘Other liabilities of the Reserve Bank’ includeinternal reserves and provisions of the ReserveBank such as Exchange Equalisation Account(EEA), Currency and Gold Revaluation Account

5

Monetary Statistics

(CGRA), Contingency Reserve and AssetDevelopment Reserve. The reserves, viz.,Contingency Reserve, Asset Development Reserve,CGRA and EEA reflected in ‘Other Liabilities’ arein addition to the ‘Reserve Fund’ of Rs.6,500crore held by the Reserve Bank as a distinctbalance sheet head. Gains/losses on valuationof foreign currency assets and gold due tomovements in the exchange rates and/or pricesof gold are not taken to Profit and Loss Accountbut instead booked under a balance sheet headnamed as CGRA. The balance representsaccumulated net gain on valuation of foreigncurrency assets and gold. CGRA was earlierknown as Exchange Fluctuation Reserve (EFR).The balance in EEA represents provision madefor exchange losses arising out of forwardcommitments. Contingency Reserve representsthe amount set aside on a year-to-year basis formeeting unexpected and unforeseencontingencies including depreciation in value ofsecurities, exchange guarantees and risks arisingout of monetary/ exchange rate policycompulsions. In order to meet the internal capitalexpenditure and make investments insubsidiaries and associate institutions, a furtherspecified sum is provided and credited to theAsset Development Reserve.

‘Net non-monetary liabilities (NNML) of theReserve Bank’ are liabilities which do not haveany monetary impact. These comprise items suchas the Reserve Bank’s paid-up capital andreserves, contribution to National Funds (NIC-LTO Fund and NHC-LTO Fund), RBI employees’PF and superannuation funds, bills payable,compulsory deposits with the RBI, RBI’s profitheld temporarily under other deposits, amountheld in state Governments Loan Accounts underother deposits, IMF quota subscription and otherpayments and other liabilities of RBI less netother assets of the RBI. Similarly, NNML ofbanks include items such as their capital,reserves, provisions, etc. NNML of the bankingsector includes NNML of the Reserve Bank andthat of other banks.

‘Currency with the public’ is currency incirculation less cash held by banks. ‘Demanddeposits’ include all liabilities which are payableon demand and they include current deposits,

demand liabilities portion of savings bankdeposits, margins held against letters of credit/guarantees, balances in overdue fixed deposits,cash certificates and cumulative/ recurringdeposits, outstanding Telegraphic Transfers (TTs),Mail Transfers (MTs), Demand Drafts (DDs),unclaimed deposits, credit balances in the CashCredit account and deposits held as security foradvances which are payable on demand. Moneyat Call and Short Notice from outside theBanking System is shown against liability toothers.

‘Time deposits’ are those which are payableotherwise than on demand and they include fixeddeposits, cash certificates, cumulative andrecurring deposits, time liabilities portion ofsavings bank deposits, staff security deposits,margin money held against letters of credit ifnot payable on demand, India MillenniumDeposits and Gold Deposits.

‘Net bank credit to Government’ comprise theRBI’s net credit to Central and StateGovernments and commercial and co-operativebanks’ investments in Central and StateGovernment securities. ‘Bank credit tocommercial sector’ include RBI’s and otherbank’s credit to commercial sector. Other banks’credit to commercial sector includes banks’ loansand advances to the commercial sector (includingscheduled commercial banks’ food credit) andbanks’ investments in “other approved”securities.

The acronyms NM1, NM

2 and NM

3 are used to

distinguish the new monetary aggregates [asproposed by the Working Group on MoneySupply: Analytics and Methodology ofCompilation (WGMS) (Chairman: Dr. Y.V. Reddy),June 1998] from the existing monetaryaggregates. NM2 and NM3 are based on theresidency concept and hence do not directlyreckon non-resident foreign currency repatriablefixed deposits in the form of FCNR(B) deposits,Resurgent India Bonds (RIBs) and IndiaMillennium Deposits (IMDs). Residencyessentially relates to the country in which theholder has a centre of economic interest.Currency and deposits held by the non-residentsin the rest of the world sector would be related

6


to balance of payments considerations such asinternational capital flows rather than to thedomestic demand for monetary assets or to theuse of money in domestic transactions. Whilethere is a need to categorise deposit liabilitiesby residency, it may not be appropriate toexclude all categories of non-resident depositsfrom domestic monetary aggregates as non-resident rupee deposits are essentially integratedinto the domestic financial system. Therefore,only non-resident repatriable foreign currencyfixed deposits are excluded from deposit liabilitiesand treated as external liabilities. Accordingly,from among the various categories of non-resident deposits, FCNR(B), Resurgent IndiaBonds (RIBs), and India Millennium Deposits(IMDs) were classified as external liabilities andexcluded from the domestic money stock. Othermajor features of the new monetary and liquidityaggregates are as follows:

1. Compilation of four measures of monetaryaggregates, and three measures of liquidityaggregates besides a comprehensivefinancial sector survey. NM

0 is essentially

the monetary base, compiled mainly fromthe balance sheet of the Reserve Bank ofIndia; NM1 purely reflects the non-interestbearing monetary liabilities of the bankingsector; NM

2 includes besides currency and

current deposits, saving and short-termdeposits reflecting the transactions balancesof entities. NM3 was redefined to reflectadditionally to NM2 the call funding that thebanking system obtains from other financialinstitutions.

2. Bank credit is often specifically referred, inmonetary economics, as a critical variableaffecting consumption and capital formationin a direct manner. As such it is oftenregarded as a more useful indicator of realsector activity than money supply. In India,one of the objectives of monetary policy isclearly stated in official documents as oneof ensuring adequate flow of credit to theproductive sectors of the economy. Whilecredit to government from the bankingsystem is clearly identified, bank credit tothe commercial sector, includes onlyadvances in the form of loans, cash credit,

overdrafts, bills purchased and discounted,and investments in approved securitiesother than government securities. However,commercial banks have in recent years beeninvesting in securities such as commercialpaper, shares and debentures issues by thecommercial sector, which are not reflectedin the conventional credit aggregates. Thedefinition of bank credit has been broadenedto include such investments.

3. Net foreign exchange assets (NFA) of thebanking sector comprise the RBI’s netforeign exchange assets and the net foreigncurrency assets of the banking system. Netforeign currency assets of the bankingsystem comprise their holdings of foreigncurrency assets net of i) their holdings ofnon-resident repatriable foreign currencyfixed deposits which is presently defined toinclude FCNR(B) deposits and ii) overseasforeign currency borrowings.

4. In the new monetary aggregate NM3, capitalaccount consists of paid-up capital andreserves. ‘Other Items (net)’ is the residual,balancing the components and sources ofthe monetary and banking accounts andincludes other demand and time liabilities,net inter-bank liabilities, etc., as applicable.

1.3 COVERAGE

At present monetary aggregates are compiledbased on the data from the scheduledcommercial banks, cooperative banks, urbancooperative banks and the post offices. Thecoverage of co-operative banks has increased overtime (Table 1.2). As regards co-operative banks,data up to February 1970 include State co-operative banks, while the data from March 1970onwards are inclusive of central co-operativebanks and primary co-operative banks.

1.3.1 Changes in the Compilation

There was a change in the treatment ofapportionment of savings deposits into its twocomponents - demand and time in March 1978.Savings bank accounts are bifurcated into demandand time portions depending on whether interestis actually paid on such deposits. Banks arerequired to report such classification on the basis

7

Monetary Statistics

of the position as at close of business at September30 and March 31 instead of as at end-June and asat end-December as done hitherto.

The evolution of methodology of compilation of

monetary aggregates in India has beenencapsulated in the table appended below (Table1.2).

Table 1.2: Money Stock Measures: Evolution of Methodology of Compilation

First Working Group Second Working Group Working Group on Money REMARKS(FWG) (1961) (SWG) (1977) Supply (WGMS) (1998)

1 2 3 4

Components (C)

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

C.I.1 Notes in circulation

C.I.2 Circulation of Rupeecoins and small coins i.e.,Government’s currencyliabilities to the Public

C.I.3 Currency returnedby Pakistan

C.I.4 Cash in hand withbanks i.e., commercialbanks and state co-operative banks

C.I.5 Balance of theCentral and StateGovernments held attreasuries

C.II. Aggregate Depositswith Banks (C.II.1+C.II.2)

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


C.I.2 Circulation ofRupee coins and smallcoins i.e., Government’scurrency liabilities to thePublic

C.I.3 Currency returnedby Pakistan

C.I.4 Cash in hand withthe banking system i.e.,commercial banks, stateco-operative banks,central co-operativebanks and primary co-operative banks

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

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


C.I.2 Circulation ofRupee coins and smallcoins i.e., Government’scurrency liabilities to thePublic

C.I.3 Cash in hand withthe banking system

C.II. Aggregate Depositsheld by Residents withthe Banking System(CII.1+C.II.2-C.II.2.2.1-C.II.2.3.1)

Comprise rupee coins andsmall coins. Ten-rupeecoins issued sinceOctober 1969, two rupee-coins issued sinceNovember 1982 and fiverupee coins issued sinceNovember 1985 areincluded under rupeecoins. Net of return ofIndian notes fromPakistan.

The FWG considered onlycommercial and state co-operative banks while theSWG extended thecoverage to central co-operative banks andprimary co-operativebanks consisting of urbanco-operative banks andsalary earners’ societies.

Since August 1967,balances held attreasures have not beenincluded in the measurein view of their meagreamounts.

With the inclusion ofcentral and urban co-operative banks, the SWGtreated inter-bankdeposits with the bankingsystem as part of netnon-monetary liabilities[i.e., other items (net) asdefined by the WorkingGroup on Money Supply

8



1 2 3 4

C.II.1 Demand Depositswith banks (includinginter-bank demanddeposits with state co-operative banks)

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

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

C.III.1 Other Depositswith the RBI

C.II.1 Demand Depositswith the banking system.

C.II.2 Time Deposits withthe banking system.

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


C.II.1 Demand Depositswith the banking system.

C.II.2 Time Deposits heldby Residents with thebanking system.(CII.2.1+C.II.2.2+C.II.2.3)

C.II.2.1 Certificates ofDeposit (CDs)

C.II.2.2 Short-term1 timedeposits

C.II.2.2.1 ForeignCurrency Repatriableshort-term1 ‘FixedDeposits held by Non-Residents

C.II.2.3 Long-term 2 timedeposits

C.II.2.3.1 ForeignCurrency Repatriablelong-term2 FixedDeposits held by Non-Residents

C.II.3 Savings Accounts

C.II.3.1 Time Liabilitiesportion of SavingsAccounts

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


(WGMS): Analytics andMethodology Compilation.The WGMS recommendedthat aggregate depositsshould be on residencybasis, thereby excludingrepatriable foreigncurrency fixed depositsheld by non-residents,e.g., FCNR(B) deposits,from money supply.

The WGMS recommendeda break-up of timedeposits into CDs andother time deposits onthe basis of maturitystructure partitioned atone year.

9

Monetary Statistics


1 2 3 4

C.III.2 IMF Deposits withRBI in Account No.1 *

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


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

C.III.4 CompulsoryDeposits with RBI

C.III.5 Profits of the RBIheld temporarily underother deposits andsubscriptions to stategovernments’ loanspending allotment

C.IV. Post Office TotalDeposits

C.IV.1 Post OfficeSavings Deposits

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


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

C.III.4 CompulsoryDeposits with RBI

C.III.5 Profits of the RBIheld temporarily underother deposits andsubscriptions to stategovernments’ loanspending allotment

C.IV. Post Office TotalDeposits

C.IV.1 Post OfficeSavings Deposits

C.V. Call/Term MoneyBorrowings by ScheduledCommercial Banks fromnon-bank sources(excluding PDs)

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

Balances under ReserveBank Employees’Pension/Provident andCo-operative GuaranteeFunds have beenexcluded from moneysupply since January1964.

Balances underAdditional Emoluments(Compulsory Deposits)Act 1974 and theCompulsory DepositScheme (Income TaxPayers) Act were excludedfrom money supplyeffective August 16, 1974and December 13, 1974,respectively.

Post Office Deposits wereincluded in the monetaryaggregates by the SWG.The WGMS recommendedthat these should be partof liquidity aggregates.

Borrowings representmoney at call and shortnotice obtained fromoutside the bankingsystem, but excluderefinance from RBI andfinancial institutions.

There is a break in theM1 series following thereclassification ofdemand and time

* IMF Account No. 1

The IMF conducts its financial dealings with a member through the fiscal agency and the depository designated by themember. In addition, each member is required to designate its central bank as a depository for the IMF’s holding of themember’s currency, or if it has no central bank, a monetary agency or a commercial bank acceptable to IMF. Mostmembers have designated their central banks as both the depository as well as the financial agency.

The depository maintains without any service charge or commission, two accounts that are used to record the IMF’sholdings of the member’s currency the IMF’s account no. 1 and IMF’s account no. 2 The no. 1 account is used for IMFtransactions, including subscription payments, purchases and repurchases and repayment of resources borrowed by IMF.

10



1 2 3 4

C.V. Aggregate MonetaryResources (=C.IV+C.II.2)

SOURCES (S)

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

S.I.1 Net RBI Credit toGovernment 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)

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

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

C.VIII. M4 (=C.IV+C.VII.)

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

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

S.I.1.1 Net RBI Credit tothe Central Government(S.I.1.1.1 + S.I.1.1.2 +

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

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

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

C.X. Term Deposits ofFinancial Institutions(FIs)

C.XI. Certificates ofDeposit issued by FIs.

C.XII. Term Borrrowingsby FIs.

C.XIII. L2 (=C.IX +C.X+C.XI +C.XII)

C.XIV. Public Depositsby Non-BankingFinancial Companies(NBFCs)

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

S.I Net Bank Credit toGovernment (S.I.1+S.I.2)

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

S.I.1.1 Net RBI Credit toCentral Government(S.I.1.1.1+S.I.1.1..2 +

components of savingsaccounts vide circularDBOD.No.Ref.BC.127/C-96(Ret)-77 dated October15, 1977.

Data on aggregatemonetary resourcesproposed by the FWGwere first published inthe Bank’s Annual Report1964-65 and in theReport on Currency andFinance 1967-68.

Includes IDBI, ICICI,IFCI, IIBI, EXIM Bank,TFCI, NABARD, SIDBIand NHB

Includes NBFCs havingpublic deposits of Rs. 20crore or above

11

Monetary Statistics


1 2 3 4

S.I.1.1 Loans andAdvances to the CentralGovernment

S.I.1.2 Bills Purchasedand Discounted

S.I.1.3 Investments inTreasury Bills

S.I.1.4 Investments inGovernment of IndiaSecurities

S.I.1.5 Rupee coins heldby the RBI

S.I.1.6 Deposits of theCentral Government withthe RBI

S.I.1.7 Loans andAdvances to StateGovernments

S.I.1.8 Deposits of StateGovernments

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

S.I.2.1 Other Banks’investments inGovernment securities

S.I.2.2 Government’sCurrency Liabilities to thePublic adjusted forbalances in treasuries

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

S.I.1.1.3 + S.I.1.1.4 +S.I.1.1.5 - S.I.1.1.6)

S.I.1.1.1 Loans andAdvances to the CentralGovernment

S.I.1.1.2 Bills Purchasedand Discounted

S.I.1.1.3 Investments inTreasury Bills

S.I.1.1.4 Investments inCentral GovernmentSecurities

S.I.1.1.5 Rupee coinsheld by the RBI

S.I.1.1.6 Deposits of theCentral Government withthe RBI

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

S.I.1.2.1 Loans andAdvances to StateGovernments

S.I.1.2.2 Deposits ofState Governments

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

S.I.2.1 Other Banks’investments inGovernment securities

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

S.I.1.1.3 + S.I.1.1.4 +S.I.1.1.5-S.I.1.1.6)

S.I.1.1.1 Loans andAdvances to the CentralGovernment

S.I.1.1.2 Bills Purchasedand Discounted

S.I.1.1.3 Investments inshort-term1 CentralGovernment securities

S.I.1.1.4 Investments inlong-term2 CentralGovernment Securities

S.I.1.1.5 Rupee coinsheld by the RBI

S.I.1.1.6 Deposits of theCentral Government withthe RBI

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

S.I.1.2.1 Loans andAdvances to StateGovernments

S.I.1.2.2 Deposits ofState Governments

S.I.2 Credit toGovernment by theBanking System (S.I.2.1+ S.I.2.2)

S.I.2.1 Investments inshort-term Governmentsecurities by theBanking System

S.I.2.2 Investments inlong-term2 Governmentsecurities by theBanking System

S.II. Bank Credit toCommercial Sector(S.II.1+S.II.2)

Treasury Bills are to bevalued at carrying cost.

Government’s currencyliabilities to the Publicwere carved out as anindependent source ofmoney stock in October1962.

The nomenclature“private sector” waschanged into “commercial

12



1 2 3 4

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

S.II.1.1 RBI’sinvestments in shares/bonds of financialinstitutions, ordinarydebentures of co-operative sectors, CLMBdebentures etc.

S.II.1.2 Loans tofinancial institutions

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

S.II.2 Credit to theCommercial Sector bythe Banking System(S.II.2.1 + S.II.2.2+S.II.2.3 + S.II.2.4)

S.II.2.1 Bank Credit

sector” in 1970, as bankcredit included creditgiven to commercial/manufacturingenterprises in the publicsector too.

On the establishment ofNational Bank forAgriculture and RuralDevelopment (NABARD)on July 12, 1982, certainassets and liabilities ofthe RBI were transferredto NABARD, necessitatingsome reclassification ofaggregates on the sourcesside of money stock sincethat date. The WGMSrecommended thereclassification of theRBI’s refinance toNABARD as credit tocommercial sector ratherthan as claims on banksas had been the practicehitherto.

With the introduction ofthe Bills RediscountingScheme, the commercialbanks started discountingthe internal bills with theRBI which have beenincluded in the RBI creditto commercial sectorsince June 1971.

Includes loans, cashcredit and overdrafts andinternal and foreign billspurchased and

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

S.II.1.1 RBI’s investmentsin shares/bonds offinancial institutions,ordinary debentures of co-operative sectors, CentralLand Mortgage Bank(CLMB) debentures etc.

S.II.1.2 Loans to financialinstitutions

S.II.2 Other Banks’ netcredit 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.1 RBI Credit toCommercial Sector(S.II.1.1+S.II.1.2+S.II.1.3)

S.II.1.1 RBI’sinvestments in shares/bonds of financialinstitutions, ordinarydebentures of co-operative sectors, CLMBdebentures etc.

S.II.1.2 Loans tofinancial institutions

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

S.II.2 Other Banks’credit to CommercialSector (S.II.2.1 +S.II.2.2)


13

Monetary Statistics


1 2 3 4

discounted of SCBs,RRBs.

Include investments insecurities which are notapproved for maintenanceof statutory liquidity ratio(SLR) such asCommercial Papers, unitsof UTI and mutual fundsand shares/debentures/bonds of the public andprivate non-bank sector.

As data for central andprimary co-operativebanks were not includedin money supply, theFWG had adjusted bankcredit for net inter-bankliabilities. These were,however, treated as partof net non-monetaryliabilities by the SWG onextension of full coverageto the co-operative sector.

The FWG had adjustedbank credit against loansfrom select financialinstitutions whichreceived refinance fromthe RBI which hadalready been reckoned inthe RBI credit to thecommercial sector. TheSWG did away with thisadjustment as it wasargued that these FIs hadsubstantial access tosources of funds otherthan those from the RBI.

Banks’ net lendings toPDs, net of their callborrowings from PDs, arepart of net inter-bankassets under the presentreporting format.However, as the bankingsector in money supplyexcludes PDs, this itemwas included as part ofcredit from the bankingsystem by the WGMS.

S.II.2.2 OtherInvestments

S.II.2.3. Net inter-bankLiabilities

S.II.2.4 Loans fromfinancial institutions


S.II.2.2 Investments inother ApprovedSecurities


S.II.2.4 Net lending toPrimary Dealers

14



1 2 3 4

S.II.2.5 Time depositsheld by Banks (includinginter-bank time depositsheld by state co-operativebanks)

S.III Net ForeignExchange Assets of theBanking Sector(S.III.1+S.III.2)

S.III.1 Net ForeignExchange Assets of theRBI (S.III.1.1 + S.III.1.2 +S.III.1.3-S.III.1.4-S.III.1.5)

S.III.1.1 Gold Coin andBullion

S.III.1.2 ForeignSecurities


S.III.1 Net ForeignExchange Assets of theRBI (S.III.1.1 + S.III.1.2 +S.III.1.3-S.III.1.4-S.III.1.5)




S.III.1 Net ForeignExchange Assets of theRBI (S.III.1.1 + S.III.1.2-S.III.1.3+S.III.1.4)


S.III.1.2 ForeignCurrency Assets of theRBI(S.III.1.2.1+S.III.1.2.2)


This adjustment wasconsidered necessarysince the FWG wasconcerned with M1. Thepresentation of data onbank credit tocommercial sector on netbasis was changed intogross basis in May 1974,as (i) time deposits areused not only forfinancing bank credit tocommercial sector butalso for lending to theGovernment and (ii) theseare not owned bycommercial enterpriseswho largely borrow frombanks.

Inclusive of valuation ofGold following itsrevaluation close tointernational marketprice effective October 17,1990. Such revaluationhas a correspondingeffect on Reserve Bank’snet non-monetaryliabilities (capitalaccount)

Since July 1996, foreigncurrency assets are beingvalued at the exchangerate prevailing at the endof every week. Suchrevaluation has acorresponding effect onReserve Bank’s net non-monetary liabilities(capital account).

Certain foreign securitiese.g., IBRD shares,Commonwealth bondsetc. which were part ofRBI’s claims on

15

Monetary Statistics


1 2 3 4

S.III.1.3 Balances heldabroad

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

S.III.1.5 Special Currencywithdrawn from GulfStates held under Otherdeposits of the RBI if any.

S.III.2 Net ForeignExchange Assets ofBanking System

S.IV. Net non-monetaryLiabilities of the BankingSector (S.IV.1+S.IV.2)

S.IV.1 Net non-monetaryLiabilities 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.IV.1.1 Paid-up Capital

S.IV.1.2 Reserves

S.III.1.3 Balances heldabroad


S.III.1.5 Quotasubscription in rupees.

S.III.2 Net ForeignExchange Assets ofBanking System(Authorised Dealers’Balances)

S.IV. Government’sCurrency Liabilities tothe Public

S.V. Net non-monetaryLiabilities of the BankingSector (S.V.1+S.V.2)

S.V.1 Net non-monetaryLiabilities 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.1.1 Paid-up Capital

S.V.1.2 Reserves

S.III.1.2.2 Balances heldabroad


S.III.1.4 Quotasubscription in rupees.

S.III.2 Net ForeignCurrency Assets ofBanking System(S.III.2.1-S.III.2.2-S.III.2.3)

S.III.2.1 ForeignCurrency Assets of theBanking System

S.III.2.2. OverseasBorrowings of theBanking System

S.III.2.3 Non-ResidentRepatriable ForeignCurrency Fixed Depositswith the Banking System(C.II.2.2.1+C.II.2.3.1)

S.IV. Government’sCurrency Liabilities tothe Public

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

S.V.1 Capital Account ofthe 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.1.1 Paid-up Capital

S.V.1.2 Reserves

Government werereclassified as part of itsforeign assets by theSWG.

Includes balances heldabroad (i.e., the cashcomponent of nostroaccounts, etc.) andinvestments in eligibleforeign securities andbonds.

Net of Indian currencyreturned by Pakistanawaiting adjustment.

The WGMS hasbifurcated the non-monetary liabilities of thebanking sector into thecapital account and otheritems (net).

16



1 2 3 4

S.IV.1.3 Contributions toNational Funds

S.IV.1.4 Bills Payable

S.IV.1.5 Other Liabilities

S.IV.1.6 Other Assets netof Gold in BankingDepartment

S.IV.1.7 Indian currencyreturned by Pakistanawaiting adjustment

S.IV.2 Non-identifiablenet non-monetaryliabilities of other Banks(residual)

S.V.1.3 Contributions toNational Funds

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

S.V.1.5 CompulsoryDeposits with the RBI

S.V.1.6 Bills Payable

S.V.1.7 Other Libabilities

S.V.1.8 IMF QuotaSubscription and otherpayments in rupeesincluded in IMF A/c No.1

S.V.1.9 Other Assets netof Gold in Bankingdepartment

S.V.2 Net non-monetaryliabilities of the BankingSystem (residual)

S.V.1.3 ContingencyReserves

S.V.1.4 ExchangeFluctuation Reserve /Currency and GoldRevaluation Account

S.V.1.5 ExchangeEqualisation Account

S.V.1.6 Contributions toNational Funds

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

S.VI. Other items (net) ofthe 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 CompulsoryDeposits with theRBIS.VI.1.3 Bills Payable

S.VI.1.4 Other LiabilitiesExcludes contingencyreserve, exchangefluctuation reserve andexchange equalizationaccount which now formpart of capital accountand are, therefore,adjusted.

17

Monetary Statistics


1 2 3 4

S.VI.1.5 ContingencyReservesS.VI.1.6Exchange FluctuationReserve / Currency andGold RevaluationAccount

S.VI. 1.7 ExchangeEqualisation Account

S.VI.1.8 IMF QuotaSubscription and otherpayments in rupeesincluded in IMF A/c No.1

S.VI.1.9 Other Assets netof Gold in Bankingdepartment

S.VI.2 Other items (net)of the Banking System(residual)

1. Of 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.

References

Report of the Second Working Group (ChairmanM. L. Ghosh) on “Money Supply in India:Concepts, Compilation and Analysis”, ReserveBank of India, Bombay, 1977.

Report of the Working Group (Chairman Y. V.Reddy) on “Money Supply: Analytics andMethodology of Compilation”, Reserve Bank ofIndia, Mumbai, June 1998.

18


2. BANKING STATISTICS

The banking system in India comprisescommercial and cooperative banks, of which theformer accounts for more than 90 per cent ofbanking system’s assets. Besides a few foreignand Indian private banks, the commercial bankscomprise nationalized banks (majority equityholding is with the Government), the State Bankof India (SBI) (majority equity holding being withthe Reserve Bank of India) and the associatebanks of SBI (majority holding being with StateBank of India). These banks, along with regionalrural banks, constitute the public sector (state-owned) banking system in India. A diagrammaticstructure of Indian banking, includingcooperatives, is presented in Figure 2.1. Bankingstatistics in India is predominantly compiled anddisseminated by the Reserve Bank of India (RBI)and National Bank for Agriculture and RuralDevelopment (NABARD). As the data collectionmechanism and the dissemination standardsthereof vary for commercial and cooperativebanks, this chapter presents relevant detailsseparately for commercial banks and cooperativebanks. However, there is some overlappinginformation which is collected both fromcommercial and cooperative banks. AccordinglySection 2.1 covers information on commercialbanks, while that of cooperative banks ispresented in Section 2.2.

2.1. Banking Statistics on CommercialBanks

As a part of central banking activities and theoverall economic perspective of the bankingsystem of the country, RBI collects a vastamount of information on the banking systemthrough various statutory and control (non-statutory) returns. Control returns cover variousaspects of banking information like spatialdistribution of deposits and credit, internationalbanking, priority sectors, etc. Each aspect isagain defined by its own separate statisticalsystem. Against this background, the informationbased on statutory returns and those of controlor special returns are presented separately.

2.1.1. Statistics based on Statutory Returns

The data received through various statutoryreturns in RBI are mainly used for monetarypolicy formulation and regulatory prescriptions.However, the information based on a few returnsis only disseminated to the public. Among them,statistics filed statutorily by banks on tworeturns/reports are most significant, viz., FormA/B and annual reports of banks (balance sheetand profit and loss account). These are discussedbelow.

2.1.1.1. Business of all Scheduled Banksin India

One of the most important statistics based onstatutory Form A/B returns, which aredisseminated by RBI (RBI Bulletin), are labelledunder the title “Business of all Scheduled Banksin India”. Each Scheduled Bank (commercial andcooperative bank) is required to furnish to theRBI fortnightly return showing major items ofits assets and liabilities in India as at the closeof business on reporting Friday, as per Section42(2) of RBI Act, 1934. Scheduled Banks arealso required to furnish a special returncorresponding to the last Friday of every monthif it is not a reporting Friday. This return issubmitted in the prescribed form viz., Form-Afor Scheduled Commercial Banks and Form-Bfor Scheduled Cooperative Banks. Provisionaldata are to be submitted within 7 days of thereference date and final data within 21 days.The format of Form ‘A’ was revised based onthe recommendation of the Working Group onMoney Supply: Analytics and Methodology ofCompilation (Chairman: Dr. Y. V. Reddy) inOctober 1998. In an attempt to fill the data gapsemerged due to the liberalisation andderegulation in the financial sector, theScheduled Commercial banks have been advisedas a sequel to the recommendations of the ReddyCommittee to report the returns under Section42(2) in a revised format with effect from 9th

October 1998. The revised format includesMemorandum to Form ‘A’ (paid-up capital,reserves, etc.), Annexure ‘A’ (details of foreign

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Banking Statistics

20


currency liabilities and assets) and Annexure ‘B’(details of investments in non-SLR securities).

The provisional Section 42(2) data are releasedby RBI through weekly press communiqué andare also published in the Weekly StatisticalSupplement to RBI Bulletin (WSS). The final dataof Section 42(2) return are published in theReserve Bank of India Bulletin, every month, intwo tables, viz., i) All Scheduled Banks-Businessin India and ii) All Scheduled Commercial Banks-Business in India.

2.1.1.1.2. Measurement Needs of the Data

Section 42(2) data are primarily collected formonitoring the compliance of statutory cashreserve ratio (CRR) by Scheduled Banksoperating in India and also for money supplycompilation. In addition, these data are also usedfor monitoring overall banking business in India,including the trends of important indicators likeaggregate deposits, bank credit, investments, etc.These data are published in the two statutorypublications of RBI viz., (i) RBI Annual Reportand (ii) Report on Trend and Progress of Bankingin India.

2.1.1.1.3. Concepts, Definitions andClassifications

As per Section 42(2) of the RBI Act, 1934, everyscheduled bank is required to submit to theReserve Bank of India a return showing (i) theamount of its demand and time liabilities andthe amount of its borrowings from banks inIndia, classifying them into demand and timeliabilities, (ii) the total amount of legal tendernotes and coins held by it in India, (iii) thebalances held by it at other banks in currentaccount and the money at call and short noticein India, (iv) the investments (at book value) inCentral and State Government securitiesincluding Treasury Bills and Treasury depositreceipts, (v) the amount of advances in India,(vi) the inland bills purchased and discountedin India and foreign bills purchased anddiscounted, at the close of business on eachalternate Friday, and every such return shall besent not later than seven days after the date towhich it relates.

Effectively, Form ‘A’ & Form ‘B’ do not differ exceptfor one item viz., ‘Demand and Time Liabilities’under ‘Liabilities to the Banking System’, forwhich, the break-up into demand liabilities andtime liabilities are given separately in the case ofCooperative Banks (i.e., in Form ‘B’).

Definitions / classification of Liabilities to the‘Banking System’ as well as Liabilities to othersin India are given in the following paragraphs.

I. Liabilities to the Banking System in India

a) Demand and time deposits from banks

b) Borrowings from banks (includes inter-bank borrowings and inter-bankdeposits at call or short notice notexceeding 14 days).

c) Other demand and time liabilities

II. Liabilities to Others in India

a) Aggregate deposits (other than frombanks)

i) Demand

ii) Time

b) Borrowings (borrowings represent totalborrowings from outside the ‘BankingSystem’. Money at call and short noticeobtained from LIC, UTI etc. areincluded where as borrowings fromRBI, NABARD, EXIM Bank etc. areexcluded from this item.).

c) Other demand and time liabilities

Demand Deposits comprise:

(i) Current deposits

(ii) Demand liabilities portion of savings bankdeposits

(iii) Margins held against letter of credit/guarantees

(iv) Balances in overdue fixed deposits

(v) Cash certificates

(vi) Cumulative/Recurring deposits

(vii) Outstanding telegraphic and mailtransfers

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Banking Statistics

(viii) Demand drafts

(ix) Unclaimed deposits

(x) Credit balances in the cash creditaccounts

(xi) Deposits held as security for advanceswhich are payable on demand

Time Deposits comprise:

(i) Fixed deposits

(ii) Cash certificates

(iii) Cumulative and recurring deposits

(iv) Time liabilities portion of savings bankaccount

(v) Staff security deposits

(vi) Margins held against letters of credit ifnot payable on demand

(vii) Fixed deposits held as security foradvances

(viii) Money repayable at notice exceeding 14days or more received from LIC, UTI, etc.

Other Demand and Time Liabilities comprise:

(i) Interest accrued on deposits

(ii) Bills payable

(iii) Unpaid dividends

(iv) Suspense account balances representingamounts due to other banks or public

(v) Participation certificates issued to otherfinancial institutions other than banks

(vi) Any amount due to the ‘Banking System’which are not in the nature of depositsor borrowings. (Such liabilities may arisedue to items such as (a) collection of billson behalf of other banks (b) interest dueto other banks and so on. Whenever ithas not been possible to segregate theliabilities to the ‘Banking System’ fromthe total of ‘Other demand and timeliabilities’, the entire ‘Other demand andtime liabilities’ are treated as liability to‘Others’).

III. Assets with the ‘Banking System’

Assets with the banking system comprise thefollowing:

a. Balances with the ‘Banking System’ inCurrent Account

b. Balances with Other Banks in OtherAccounts

c. Money at Call and Short Notice: Thisrepresents funds made available to the‘Banking System’ by way of loans ordeposits repayable at call or short notice of14 days or less.

d. Advances to Banks, i.e., Due from Banks:This represents the loans other than ‘Moneyat call and short notice’ made available tothe ‘Banking System’. ParticipationCertificates purchased is also included here.

e. Other Assets: Any other amounts due fromthe ‘Banking System’, which cannot beclassified under any of the above threeitems. For example, in the case of inter-bank remittance facilities scheme, as ondate, the total amount held by a bank withother banks (in transit or other accounts)are shown here as such sums cannot beconstrued as ‘balances’ or ‘call money’ or‘advances’.

IV. Cash in India (i. e., Cash in hand)

Cash in hand represents notes and coins heldby the bank as till money. Currencies of foreigncountries are not included here.

V. Investments in India

Investments indicate the total investments in (A)Government securities and (B) Other approvedsecurities.

A. Investments in Government Securities:

(i) Central and State Governmentsecurities including treasury bills

(ii) Treasury deposit receipts

(iii) Treasury savings deposit certificates

(iv) Postal obligations such as nationalplan certificates, national savingscertificates, etc.

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(v) Government Securities deposited byforeign scheduled banks underSec.11(2) of BR Act, 1949

B. Investments in Other Approved Securities:

(i) Securities of State associated bodiessuch as Electricity Board, HousingBoard and Corporation Bonds.

(ii) Debentures of Land DevelopmentBanks

(iii) Units of UTI

(iv) Shares of RRBs, etc., which are treatedas approved securities under Sec.5 (a)of BR Act, 1949.

VI. Bank Credit in India (excluding inter-bank advances)

Bank credit in India is the total of three itemsviz. (A) Loans, cash-credits and overdrafts, (B)Inland bills – purchased and discounted and (C)Foreign bills – purchased and discounted. Bills(inland and foreign) rediscounted with the RBI,IDBI and other financial institutions are notincluded under this head.

a) Loans, cash-credits and overdrafts

(i) Demand loans

(ii) Term loans

(iii) Cash-credits

(iv) Overdrafts

(v) Packing credit, etc., granted toconstituents (other than banks)

(vi) Any other type of credit facilities otherthan by way of bills purchased anddiscounted

b) Inland Bills – Purchased and Discounted

Inland bill drawn and payable in India includingdemand draft and cheques purchased. Separatebreak-up is presented for bills purchased anddiscounted.

c) Foreign Bills –Purchased and Discounted

Foreign bills covers all export and import billspurchased and discounted in India as also

cheques, demand drafts drawn in foreigncurrencies and paid by banks’ office in India.Separate break-up is provided for bills purchasedand discounted.

In addition to the core return, some of theadditional important items are reported. Theseinclude: (a) net demand and time liabilities forthe purpose of Sec.42(1) of the RBI Act, 1934 =Net Liabilities to the Banking System + Liabilitiesto Others in India i.e., (I-III) + II, if (I-III) is aplus figure or II only, if (I-III) is minus figure,(b) Amount of minimum deposit required to bekept with the RBI under the Act and (c) theliabilities under Savings Bank Account - furtherclassified separately as the demand liabilities andtime liabilities.

Besides these items, Form ‘A’ consists ofMemorandum, Annexure A, and Annexure B.Reporting of these additional data wasimplemented with effect from 9th October, 1998as per the recommendation of Working Groupon Money Supply: Analytics and Methodology ofCompilation, 1998.

VII. Memorandum reports data on:

a. Paid-up capital,

b. Reserves (free as well as statutoryreserves) as per the last balance sheetand continue to report the same everyfortnight until the release of auditedbalance sheet of the following year)

c. Time deposits giving the time liabilitiesportion of the saving bank account (brokeninto short term and long term)

d. Certificates of deposits.

e. Net Demand and Time Liabilities

f. Amount of deposits required to bemaintained as per current rate of CRR

g. Any other liability on which CRR isrequired to be maintained under Section42(2) and 42(1A) of the Reserve Bank ofIndia Act, 1934.

h. Total CRR required to be maintained underSection 42(2) and 42(1A) of the ReserveBank of India Act, 1934.

23

Banking Statistics

Annexure A to Form A gives details on theliabilities and assets in foreign currencyoutstanding at book value and revaluation valuealong with interest, as indicated below:

Liabilities:

Liabilities to others in India

I. Non-Resident Deposits

I.1 Non-Resident External Rupee Account(NRE)

I.2 Non-Resident Non-Repatriable RupeeAccount (NRNR)

I.3 Foreign Currency Non-Resident BanksScheme [FCNR(B)] (I.3.1+I.3.2)

I.3.1 Short-term

I.3.2 Long- term

I.4 Others

II. Other Deposits/Schemes

II.1 Exchange Earner’s Foreign CurrencyAccounts

II.2 Resident Foreign Currency Accounts

II.3 ESCROW1 Accounts by IndianExporters

II.4 Foreign Credit Line for Pre-shipmentCredit account and OverseasRediscounting of Bills

II.5 Credit Balances in ACU (US dollar)Account

II.6 Others

III. Foreign Currency Liabilities to the BankingSystem in India

III.1 Inter-bank Foreign Currency Deposits

III.2 Inter-bank Foreign CurrencyBorrowings

IV. Overseas Borrowings include total ofoverdrawal in all NOSTRO2 accounts

and should not be netted for creditbalance in other NOSTRO accounts. Italso includes any other borrowingsfrom foreign market or Head Office (incase of foreign banks).

Assets:

V. Assets with the banking system in India

V.1 Foreign currency lending

V.2 Others

VI. Assets with others in India

VI.1 Bank Credit in India in ForeignCurrency

VI.2 Others

VII. Overseas Foreign Currency Assets: Theseinclude balances held abroad, i.e., (i) cashcomponent of Nostro account, debitbalances in ACU (US dollar) account andcredit balances in the commercial banksof ACU countries, (ii) short term foreigndeposits and investments in eligiblesecurities, (iii) foreign money marketinstruments including Treasury Bills and(iv) foreign shares and bonds.

The liabilities in foreign currencies under variousschemes are re-valued at FEDAI indicative rates.As regards interest, banks report accured interestin respect of all liabilities.

VIII. External Liabilities to Others subject todifferential / zero CRR prescription(I+II)

IX. External Liabilities fully subject to CRRprescription (IV)

X. Net Inter-Bank Liabilities(I-III of Form A)

XI. Any other liabilities coming within thepurview of zero prescription

XII. Liabilities subject to zero CRRprescription (VIII+X+XI)

Annexure B to Form A reports the following attheir book value and also at their revaluationvalue:

1 ESCROW account: A trust account held in the borrower’sname to pay obligations such as taxes, insurance, etc.

2 NOSTRO account: An account one bank holds with abank in a foreign country, usually in the currency ofthat foreign country.

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Investment in Approved Securities includeinvestments in Government securities brokeninto short term (of contractual maturity of oneyear or less) and long term (contractual maturityof more than a year).

Investments in non-approved securities includecommercial paper, units of UTI and other mutualfunds, shares and bonds/debentures.

Banks are required to revalue their investmentin approved securities on quarterly basis. Asregards to the revaluation of investments in non-approved securities, the same is reported as andwhen the banks revalue their investments as perthe current practice/instructions.

2.1.1.1.4. Sources and Systems

Data from Scheduled commercial banks arecollected in Form-A from all the banks belongingto different bank groups, viz., (a) State Bank ofIndia and its Associates, (b) Nationalised banks,(c) Other Scheduled Commercial Banks, (e)Foreign Banks and (f) Regional Rural Banks.Data from Scheduled cooperative banks arecollected in Form-B format from all banksbelonging to the two categories, viz., (a)Scheduled State cooperatives and (b) ScheduledUrban cooperatives.

Scheduled Commercial Banks (other than RRBs),submit the Form ‘A’ return through OnlineReturn Filing System. Data for Regional RuralBanks are received by the Rural Planning andCredit Department (RPCD) of the RBI. Data withrespect to scheduled state cooperative banks andscheduled urban cooperative banks are receivedin Final Form ‘B’ by RPCD and Urban BanksDepartment (UBD) of RBI, respectively. Thesedata are merged with the other data pertainingto commercial banks and the consolidatedstatements for all scheduled banks are generatedby DESACS of RBI.

2.1.1.1.5. Ensuring Quality Standards

Before the finalisation of these data, the followingdata checks are done:

(i) An error report for each bank isgenerated for a particular fortnightwherein all the items in the return having

either more than 20% variation or morethan Rs. 5 crore difference from itsprevious reporting fortnight level are listedin the case of RRBs and State CooperativeBanks. This list is checked with hardcopy Form A returns and errors inpunching, if found are rectified.

(ii) In the case of commercial banks, an errorreport for each bank is generated for aparticular fortnight wherein all the itemsin the return having either more than20% variation or more than Rs.50 croredifference from its previous reportingfortnight level are listed. If required, thebanks concerned are contacted forclarifications and corrections are made.

(iii) These returns are also duly checked forstatistical consistency by generating 3-sigma / 5-sigma reports.

(iv) Finally, the bank-group level aggregatesare checked with provisional data.

2.1.1.2. Annual Reports of ScheduledCommercial Banks

The present structure of reporting of data itemsin annual reports of scheduled commercial banksis as per the recommendation of GhoshCommittee Report (1985) on annual accounts ofbanks, effective from 1992-93. Basic items areinitially classified into various blocks (called‘schedules’) and data are reported statutorily,under Section 27 of Banking Regulation Act,1949. Detailed bank-wise data based on annualreports are published in ‘Statistical TablesRelating to Banks in India’. Individual definitionsof each item in the schedules of Balance Sheetand Profit & Loss Account of commercial banksare given in the Annex 2.1. Table-wise majorcontents of this publication is presented in Annex2.2. Definitions/concepts of some of theimportant ratios based on annual reportinformation published in ‘Statistical TablesRelating to Banks in India’ are as follows:

a) (i) Cash in cash-deposit ratio includescash in hand and balances with RBI.

(ii) Investments in investment-deposit ratiorepresent total investments includinginvestments in non-approved securities.

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Banking Statistics

(iii) Net interest margin is defined as thetotal interest earned less total interestpaid.

(iv) Intermediation cost is defined as totaloperating expenses.

(v) Wage bills is defined as payments toand provisions for employees.

(vi) Operating profit is defined as totalearnings less total expenses, excludingprovisions and contingencies; and

(vii) Burden is defined as the total non-interest expenses less total non-interestincome.

b) Items like capital, reserves, deposits,borrowings, advances, investments andassets / liabilities used to compute variousfinancial earnings / expenses ratios areaverages for the two relevant years.

c) (i) Cash-deposit ratio = (Cash in hand +Balances with RBI) / Deposits.

(ii) Ratio of secured advances to totaladvances = (Advances secured bytangible assets + Advances covered bybank or Govt. guarantees) /Advances.

(iii) Ratio of interest income to total assets=Interest earned / Total assets.

(iv) Ratio of net interest margin to totalassets = (Interest earned - Interestpaid) / Total assets.

(v) Ratio of non-interest income to totalassets = Other income / Total assets.

(vi) Ratio of intermediation cost to totalassets = Operating expenses / Totalassets.

(vii) Ratio of wage bill to intermediationcosts (Operating Expenses) = Wagebills/ Operating Expenses.

(viii) Ratio of wage bill to total expenses =Wage bills / Total expenses.

(ix) Ratio of wage bill to total income =Wage bills/ Total income.

(x) Ratio of burden to total assets =(Operating expenses - Other income) /Total assets.

(xi) Ratio of burden to interest income=(Operating expenses - Other income) /Interest income.

(xii) Ratio of operating profits to total assets= Operating profit / Total assets.

(xiii) Return on assets for a bank group isobtained as weighted average of returnof assets of individual banks in thegroup, weights being the proportion oftotal assets of the bank as percentageto total assets of all banks in thecorresponding bank group.

(xiv) Return on Equity = Net Profit / (Capital+ Reserves and Surplus).

(xv) Cost of Deposits = Interest Paid onDeposits / Deposits.

(xvi) Cost of Borrowings = Interest Paid onborrowing from RBI and others /Borrowings.

(xvii) Cost of Funds = Total Interest Paid ondeposits and borrowings/ (Deposits +Borrowings).

(xviii) Return on Advances = Interest Earnedon Advances / Advances.

(xix) Return on Investments = InterestEarned on Investments / Investments.

(xx) Return on Advances adjusted to costof funds = Return on advances – Costof funds.

(xxi) Return on Investment adjusted to Costof Funds = Return on investments –Cost of funds.


The balance sheet and profit and loss accountdata that are published in the ‘Statistical TablesRelating to Banks in India’ are sourced from theAnnual Reports of banks. Balance sheet andprofit & loss account is based on auditedinformation and thus quality of data isautomatically ensured. Statutory time limit forsubmission of data is 3 months from thereference date, i.e., June 30.

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In order to ensure quality standards, thefollowing steps are followed:

(i) Annual Reports are obtained from eachof the Scheduled Commercial bankincluding Regional Rural Banks.

(ii) Data entry of the required fields is doneand required calculations for the relevanttables are made.

(iii) If any discrepancies are observed, dataare again checked from the originalsource, i.e., the annual reports of banks.

(iv) Cross Checking of various tables are donefor consistency checks.

(v) Data are again compared with those ofthe previous year’s report.

2.1.2. Statistics based on Special Returns

2.1.2.1. Basic Statistical Return (BSR)System

The BSR system was introduced in December1972 following the recommendation of theCommittee on Banking Statistics adapting fromthe erstwhile data reporting system calledUniform Balance Book (UBB). The UniformBalance Book (UBB) system was designed toprovide a detailed and up-to-date picture of thesectoral and regional flow of bank credit andwas introduced in December 1968 in the contextof the setting up of the National Credit Council.It had twin objectives of ensuring a steady flowof information while minimising the reportingload on branches. The UBB proforma wasrequired to be submitted by every bank officeevery month and provided for the reporting ofaccount-wise information in regard to creditlimits sanctioned and advances outstandingaccording to the type of account, type ofborrower, occupation, purpose, security and rateof interest charged. This was consideredsufficiently comprehensive for policy andinformation purposes. However, the response andthe accuracy of the data obtained through theUBB system had proved to be quite inadequate.After few rounds of survey, it was noticed thatresponse from branches was very poor and alsothe quality of reporting had not been satisfactory.

Besides these difficulties, the UBB had not gonebeyond experimental stage.

Meanwhile with the nationalisation of majorIndian banks and the more definite shape givento the new policy of diversifying the pattern ofcredit, the demand for information on variousaspects of credit deployment was mounting. Amore determined effort at systematising thereporting of banking data to ensure theavailability of fairly comprehensive informationwith a minimum time lag had become necessary.Accordingly, the Reserve Bank of Indiaconstituted a ‘Committee on Banking Statistics’in April 1972 under the chairmanship of ShriA. Raman, Director, Credit Planning Cell, RBI,having members from various departments ofRBI and commercial banks to look into variousaspects of statistical reporting of data by banksand suggest appropriate steps.

The Committee submitted its report in August1972. The overall pattern of the statisticalreporting system envisaged by the committeewhich, taken together, was designated as BasicStatistical Returns (BSR) to provide a steady flowof the required data was as follows:

1. BSR 1 – Return on Advances – half-yearly –as on the last Friday of June and December– from all branches – in two parts – Part Afor accounts with limits over Rs.10,000 andPart B for accounts with limits of Rs.10,000and less.

2. BSR 2 – Return on Deposits - half-yearly –as on the last Friday of June and December– from all branches.

3. BSR 3 – Return on Advances against theSecurity of Selected Sensitive Commodities –monthly – as on last Friday of each month– from Head Offices.

4. BSR 4 – Return on Ownership of BankDeposits – once in two years – as on thelast Friday of March – from all branches(replacing present annual survey from headoffices).

5. BSR 5 – Return on Bank Investments –annual – as on the last day of March –from Head Offices (on the lines of Surveyof Bank Investments).

27

Banking Statistics

In addition to this, it was recommended thatthe Survey of Debits to Deposits, which was doneannually, to be done once in three years.

RBI agreed with the recommendations of theCommittee and accordingly implementationactions followed:

1. A ‘Committee of Direction on BankingStatistics (CDBS)’ in RBI was constitutedin to have overall charge of the BasicStatistical Returns, with officials of differentdepartments of RBI and of various banksas its members.

2. UBB returns were discontinued from themonth of July 1972.

3. The BSR system was implemented fromDecember 1972 with BSR 1, 2 and 3.

4. The BSR 4 return was implemented fromMarch 1976, which was collected from allbranches. Ownership classifications werealso changed from March 1976 survey. BSR4 was collected on sample basis for 1978and 1980 and on census basis for 1982survey. From 1984 it was made biennialsample survey.

5. BSR 5 return commenced from March 1973.

6. The Survey on Debit to Deposits accountwhich was conducted till 1971-72 annually,was next conducted in 1974-75 on censusbasis and renamed as BSR 6 from 1985-86as biennial sample survey. The survey hasbeen made quinquennial from the year2000.

7. The BSR 7 return was originally introducedin August 1974 as a monthly return tocapture branch-wise information on grossbank credit and aggregate deposits. Theperiodicity of the return was changed toquarterly from the quarter ended March1984.

8. BSR-8 on portfolio management scheme ofbanks, obtained on fortnightly basis, wasintroduced in 1992. The return wasdiscontinued in 1999 followingrecommendation of CDBS.

2.1.2.1.1. Basic Statistical Returns 1 and 2

Basic Statistical Returns (BSR) 1 and 2 formsthe major part of the BSR system.Comprehensive data on deposits and credit ofscheduled commercial banks and the informationon number of employees of the banks arecollected presently through the annual statisticalsurveys, Basic Statistical Returns (BSR)-1 and2, with 31st March as the reference date, andare obtained from the offices of scheduledcommercial banks in India including RegionalRural Banks.

The surveys used to be conducted half-yearly,as on last Friday of June and December, from1972 till 1990. From the year 1990, the surveyshave been made annual with 31st March as thereference date. To provide guidance for filling inof BSR 1 and 2 returns, the Reserve Bankbrought out the first Handbook of Instructionsin September 1972. Consequent upon theimprovements in the BSR system, the Handbookwas revised from time to time. Following thedevelopments in banking scenario in the lastcouple of years and to have uniform codingsystem for occupation/activity classification inline with National Industrial Classification (NIC)1998, which itself is based on InternationalStandard Industrial Classification (1SIC) 1990,a few revisions were introduced with effect fromMarch 2002 survey. The latest edition, sixth inthe line, provides these amendments in thesystem. As suggested by the Government of Indiato adopt a uniform classification system in orderto keep the data comparable, nationally as wellas internationally, the Reserve Bank of India hadappointed an Informal Group on Coding Systemfor Banking Statistics to look into the feasibilityand adoptability of NIC 1998 for BSR and similarinformation systems in the banks. The newactivity coding system in BSR was based on therecommendation of the Informal Group.

BSR-1 relates to gross bank credit and comprisesterm loans, cash credit, overdrafts, billspurchased and discounted, bills re-discountedunder the New Bill Market Scheme and also duesfrom banks, whereas, the bank credit data,based on returns under Section 42(2) of the RBIAct, 1934, is exclusive of dues from banks and

28


bills re-discounted under the New Bill MarketScheme. The BSR-1 return is divided into twoparts - Part A and Part B (termed as BSR-1Aand BSR-1B). The cutoff credit limit for anaccount for inclusion in BSR-1A was kept asRs. 10,000/- in 1972 at the time of itsintroduction. In the year 1984 the cutoff limitwas raised to Rs. 25,000/- and the cut-off creditlimit was raised to Rs.2 lakh for BSR-1A returnfor scheduled commercial banks other thanRegional Rural Banks from March 1999 survey.In the case of Regional Rural Banks, the cut offlimit for classifying accounts in BSR-1A has beenmade as Rs. 2 lakh from March 2002 onwards.In BSR-1A, information in respect of each of theborrowal account is collected on variouscharacteristics, such as place (district andpopulation group) of utilisation of credit, type ofaccount, type of organisation, occupationalcategory, nature of borrowal account, rate ofinterest, credit limit and amount outstanding.In BSR-1B, information in respect of accountswith individual credit limit upto Rs. 2 lakh(termed as small borrowal account) is obtainedin consolidated form for broad occupationalcategories. The BSR-1B Return has two separatecredit limit size groups, i.e., ‘up to Rs. 25,000’and ‘over Rs. 25,000 to Rs. 2 lakh’. Theinformation on small borrowal accounts areobtained in BSR-1B return from all scheduledcommercial banks (including regional ruralbanks).

In BSR-2, each bank office submits informationon deposits with their break-up into current,savings and term deposits. Information ondeposit accounts of females is given separately.Information of term deposits according todifferent maturity periods is also furnished inthis return. In addition, BSR-2 providesinformation on staff strength, classified accordingto gender and category (i.e. officers, clerical andsubordinates), in individual bank offices as onthe reference date of the returns. Depositsexclude inter-bank deposits. Current depositscomprise (i) deposits subject to withdrawal ondemand (other than savings deposits) or onnotice of less than 14 days, or term depositswith a maturity period of less than 7 days (ii)call deposits withdrawable not later than 14

days; (iii) unclaimed deposits; (iv) overdue fixeddeposits; (v) credit balance in cash credit andoverdraft accounts and (vi) contingencyunadjusted account if in the nature of deposits.Savings deposits are deposits accepted by banksunder their savings bank deposit rules. Termdeposits are deposits with a fixed maturity ofnot less than 7 days and above or subject tonotice of not less than 14 days. These wouldalso include (a) deposits payable after 14 daysnotice; (b) cash certificates; (c) cumulative orrecurring deposits; (d) Kuri & Chit deposits and(e) special deposits in the nature of termdeposits. Conceptually, the deposits data in BSR-2 and the aggregate deposits in Section 42(2)return are the same. However, the depositsexclude the proceeds of Resurgent India Bonds(RIBs) as well as India Millennium Deposits(IMDs). In BSR-2, bank branches also giveclassification of term deposits according to broadinterest rate ranges as well as size of deposits.The data on residual maturity of term deposits,introduced in March 2003, are collected throughPart-V of this return in respect of computerisedbranches of scheduled commercial banks, exceptregional rural banks.

2.1.2.1.1.1. Dissemination of data

The dissemination of information of BSR 1 & 2data is done through various publicationsbrought out by the Bank. The main publicationsare the various Volumes of ‘Banking Statistics –Basic Statistical Returns’, which was renamedas ‘Basic Statistical Returns of ScheduledCommercial Bank in India’ from Volume 29,March 2000. This publication is also availableon RBI website www.rbi.org.in from the year1996. The annual publication is also broughtout in the form of a CD-ROM since 2002presenting the data in the form of excel tables.A special publication on CD-ROM titled ‘BankingStatistics: Basic Statistical Returns 1 & 2,Volume 1 to 31: 1972 to 2002’ was brought out,which presents the three decades data, publishedin various volumes, at one place, in PDF format.This publication is also available on RBI website.The publication presents distribution of creditand deposits of scheduled commercial banks inIndia on various characteristics/ parameters.

29

Banking Statistics

The data on credit and deposits are publishedon aggregate basis on various characteristics.

1. Bank group-wise – SBI & its associates,Nationalised Banks, Foreign Banks,Regional Rural Banks, Other ScheduledCommercial Banks (Private Sector Banks)

� Nationalised banks, which include IDBILtd. from 2005.

2. Spatial Distribution – Region, State &District

� Data on Credit are presented as perplace of sanction and also as per placeof utilisation. The details are given inBSR Volumes.

� The BSR-1A return provides theidentification of the district andpopulation group of the place wherethe credit is utilised. However, in BSR-1B return, such information is notcollected. It is presumed that in respectof these accounts, the credit is utilisedat the same place where it issanctioned.

3. Population group – Rural, Semi-Urban,Urban, Metropolitan.

� Data on Credit are presented as perplace of sanction and also as per placeof utilisation.

4. Credit data are presented on variousparameters

� Occupation – Available for BSR 1A &BSR 1B. Credit data are presentedaccording to occupation of theborrower.

� Data are aggregated on sectorsand sub-sectors.

� Size of credit limit – Includes in bothBSR 1A & BSR 1B.

� Interest rate range – Based on BSR-1A data only, referred as ‘Loans andAdvances’, which excludes Bills.

� Types of account – Data are based onBSR-1A only. Data of loans against

Credit Cards are included in DemandLoans. Inland bills include both tradeand other bills.

� Organisation – Organisationalcategories of borrowing account holderis based on BSR-1A only.

� Data on Small Scale Industries arebased on both BSR 1A and BSR 1Breturns. This include

� ‘Artisans and Village & TinyIndustries’ comprising Artisans/Craftsman, Village/CottageIndustries and Tiny Industries

� Other small scale industries.

5. Distribution of deposits data are present onvarious characteristics

� Type of Deposits – Current, Savings,Term.

� Broad ownership pattern – Data arepublished against individuals (Male andFemale) and Others (excludes inter-banks).

� Original period of maturity.

� Percentage distribution of residualperiod of maturity.

� Percentage distribution of interest raterange.

� Percentage distribution of size ofdeposits.

6. Employment in banks – Total and Female(Officers, Clerks, Sub-ordinates).

The utility of BSR data is immense andmultifarious. The information is not only usedwithin RBI for the purpose of policy formulationsbut also used for answering various queriesraised by members of the parliament. The datais supplied to various Central governmentministries and departments such as CentralStatistical Organisation. State governments alsorequire the data for monitoring the progress andeconomic development of their states and state-level publications. The data is also usedextensively by individuals and institutions forresearch purposes.

30


2.1.2.1.1.2. Concepts, Definitions andClassifications

BSR-1: BSR-1 return relates to bank credit. Eachbranch/office of a bank is required to submitthis return to the Reserve Bank of India as on31st March every year. In case 31st March is aholiday, the figures relates to the immediatepreceding working day.

The bank credit reported in this return comprisesthe following items:

(a) loans, cash credits and overdrafts,

(b) inland bills purchased and discounted,

(c) foreign bills purchased and discounted.

The above items reported in BSR-1 take accountof

(a) Dues from banks which represent loans andadvances granted to banks (includingparticipations without risk sharing),

(b) Bills rediscounted with the financialinstitutions,

(c) Advances extended through Credit Cards,

(d) Bad debts (not written off) and protestedbills,

(e) Inter-bank participation with risk sharing.

However, Money at call and short notice is notincluded.

On comparison, the credit reported in BSR-1return comprises (i) credit including ‘dues frombanks’ within the meaning of fortnightly returnunder Section 42(2) of the Reserve Bank of IndiaAct, 1934 and (ii) bills rediscounted with thefinancial institutions.

The BSR1 has two parts, Part A of the return(BSR-1A) relates to accounts with individualcredit limits of over Rs.2,00,000. Particulars inrespect of each of these accounts are collectedseparately. In BSR 1A, the particulars of theaccount, viz., name of the party, account numbergiven for identification by the lending bank office,district and population group code of the placeof utilisation of credit, type of account,organisation, occupation, nature of the borrowalaccount, asset classification of the borrowal

account, rate of interest, credit limit and amountoutstanding are recorded separately for eachaccount with credit limit of over Rs.2,00,000.

In Part B of the BSR1 return (BSR-1B), account-wise information is not collected. It calls forconsolidated information on the occupation-wisetotals of accounts with individual credit limitsof Rs.2,00,000 and less. The information aregiven separately for loans with individual creditlimit of Rs. 25,000 or less and above Rs. 25,000to Rs. 2,00,000.

The cut-off point of Rs.2,00,000 for eachindividual account relates to the credit limit inforce as on the date of the return and not theamount outstanding in the account. In case nospecific credit limit is sanctioned, the amountoutstanding itself is to be treated as the creditlimit.

Reporting under BSR1 (Part A and Part B) isdone account-wise and not party-wise. The sizeof the credit limit of each account is the factorfor deciding whether it is to be individuallyreported in BSR-1A or consolidated with otheraccounts of the same occupational category inBSR-1 B.

a. Uniform branch code: The uniform branchcode allotted by the DESACS of RBI to eachbranch/office is used for uniqueidentification of a branch. At present, thebranch code consists of two parts, viz., PartI and Part II, and each part consists ofseven digits.

The attributes of an account, collected inBSR-1A return are as under:

b. Place of Utilisation of Credit: The informationon place of utilisation of credit is beingcollected under two heads viz., district andpopulation group.

(i) District: The district code indicates thedistrict where actual credit has beenor will be utilised by the borrower.

(i) Population Group: The code indicatesthe population group status of theplace of utilisation of credit. The

31

Banking Statistics

relevant codes are given in Annex 2.3(List ‘A’). Information given in thesecolumns is important for ascertainingthe State and district/populationgroup-wise flow of credit. The creditextended by a branch/office is notalways used in the same district/population group and State in whichthe branch office is located. In severalmajor urban and metropolitanbranches, a good part of the creditextended, is utilised elsewhere. Forexample, if a company having HeadOffice in Mumbai is granted anadvance for utilisation for its factorylocated in Pen (Raigad district inMaharashtra), the appropriate districtcode will be Raigad and as thepopulation of Pen is between 10,000and one lakh, the appropriatepopulation group code 2 for semi-urban area is used for the account.

It may not always be possible to indicatethe district and population group wherecertain advances are utilised, for instance,advances granted to a GovernmentCorporation (e.g. Food Corporation of India)or statutory bodies (e.g. Electricity Boards)or a privately owned company, theoperations of which extend to more thanone district, population group or state. Insuch cases, the codes of the district andpopulation group where the major portionof the advances is utilised, is recorded. Incase it is difficult to identify those aspects,the information of the place where thebranches are located, is used.

c. Type of Account: The code numbers allottedto the various types of accounts are givenin Annex 2.3 (List ‘B’). All accounts in thebooks of a branch/office are classified underone type or the other appropriately. In case,a party is given borrowing facilities underdifferent types of accounts, each account isseparately listed. Such accounts are notcombined. Pre-shipment finance under anytype of facility, viz., cash credit, overdraftand demand loans are classified as Packing

Credit. Advances by way of rediscountingof bills of other party are reported as ‘Billsdiscounted’ with appropriate occupationcategory.

d. Type of Organisation: The code numberrelevant to the type of organisation of theborrower is also recorded. Annex 2.3 (List‘C’) contains the code numbers allotted todifferent types of organisations. Organisationcode consists of two digits. The list itselfprovides a brief explanation for eachcategory of organisation. Some furtherexplanations are given below :

Government companies are defined underSection 617 of the Indian Companies Act,1956, as companies in which not less than51 per cent of the paid-up capital is heldby the Central or a State Government eithersingly or jointly.

Statutory corporations, owned by theCentral Government or by a StateGovernment, as well as companies whichare subsidiaries of Government companiesare also to be treated as Governmentcompanies. If a company is owned by theCentral and State Government jointly on50:50 basis, it is treated as a StateGovernment undertaking for the purpose ofthis return. Loans sanctioned to a StateGovernment or its departments, e.g. for foodprocurement operations, is coded as ‘StateGovernment’ (code 12).

However, advances to Co-operativeMarketing Federations for food procurementoperations as also for other purposes arecoded as ‘Co-operatives’ (code 20). All typesof co-operative institutions are givenorganisation code 20. The activities of theco-operative institutions are not relevant.Thus, organisation code 20 includes co-operative marketing and other federations,co-operative housing societies, co-operativeretail stores, etc. Even where the co-operative institution is sponsored by aGovernment body, the correct organisationcode is 20 and not 14. The activity of theco-operative (farming, processing, marketing,

32


trading, housing, etc.) are given in aseparate column.

Public and Private Limited companies areclassified as Private Corporate Sector (code31 & 32) and other private sector entitiessuch as Partnerships, Propriety concerns,Joint families, Self-Help Groups, NGOsAssociations, Clubs, Trusts and Groups,etc., are taken as Private Sector - Others(codes 33, 34 and 35). Non-profitinstitutions serving business and privatelyfunded quasi-corporate institutions areclassified as private corporate sector. Loansgranted to individuals, singly or jointly withone or more persons are assigned the codenumber 41 (Individuals - Male) or 42(Individuals - Female) depending on thegender of the sole/first account holder.

e. Nature of borrowal account: The nature ofborrowal account is recorded against eachindividual account. Codes relating to natureof borrowal account are given in Annex 2.3(List ‘D’). Tiny industries are classified withvillage and cottage industries. For loansgiven to industry, the nature of borrowalaccount can be 1 or 2 or 3 and for all otherloans it is 3.

f. Asset Classification of borrowal account:Information on asset classification of eachaccount with credit limit of over Rs.2,00,000is reported as per asset classification codeassigned to a borrowal account for reportingto DBOD/DBS of the Reserve Bank of India.The relevant codes are given in Annex 2.3(List ‘E’). The accounts are classified as‘Standard’, ‘Sub-standard’, ‘Doubtful’ or‘Loss’ Assets. The changes in guidelines asprescribed from time to time by the ReserveBank of India, is taken into account whilereporting under this column. Theinformation on asset classification iscaptured for internal consistency and thisdata is not disseminated.

g. Activity/Occupation: Information given inthis column brings out the sector-wise flowof credit. Annex 2.3 (List ‘F’) summarises 5digit code numbers for different types ofoccupation or activities. The details arepresented in Annex 2.4. The code number

appropriate to the occupation or activity ofthe borrower for each account is indicatedin this column. If the borrower is engagedin more than one type of activity and ifseparate limits/sub-limits are sanctioned bythe bank for different activities, the creditlimit and outstanding amount aresegregated for each activity and reportedseparately. For example, if a companyengaged in the manufacture of cottontextiles and chemicals is granted creditlimits by the bank, the credit limits andamount outstanding are reported separatelyfor the two units, if separate credit limitsare sanctioned. If, however, separate limitsare not sanctioned, the major activity of theborrower is taken as the basis forclassification. In a majority of cases, theoccupation code can be determined on thebasis of the activity of the borrower.However, in the case of consumption andpersonal loans such as housing loans, loansfor education, etc., activity of the borrowermay not by itself determine the occupationcode. For Example, in the case of personalloans (codes 94003, 94004, 94006, 94007,94008 and 94009), housing loans (codes94001 and 94002), loans for education (code94005), etc. It is, however, not proper todetermine the occupation code on the basisof the activity of the borrower. In suchcases, purpose for which the credit isextended (whether for education, housingor consumption) is the guideline fordetermining the correct occupation code.

h. Rate of Interest:

The rate of interest (per cent per annum)charged to an account is reported, up to twodecimals, and is exclusive of interest tax.

i) Where slab rates of interest are chargedon advances, the rate corresponding tothe largest portion of the advances shouldbe recorded. If two rates are charged, therate applicable to the major portion ofamount outstanding should be reported.

ii) In the case of Inland and Foreign BillsPurchased/Discounted, the rate ofinterest column is not filled in.

33

Banking Statistics

i. Credit Limit: The sanctioned credit limit inforce as on the date of the return is treatedas the credit limit. Any additional limitsgranted temporarily for short periods at thediscretion of agents/managers and othercompetent authorities are included if theyare in force at the time of reporting. The‘drawing limit’ which is linked to the value ofstocks hypothecated or pledged and themargin prescribed is taken as credit limit.

In recording credit limits in respect of termloans, it shows only the operative limit, i.e.the limit sanctioned minus the principalamount repaid. For example, a company hasbeen sanctioned a term-loan of Rs.25 lakh,for installation of some plant, which is to berepaid in ten equal half-yearly installments.Suppose, the company has repaid Rs.5 lakh(i.e., 2 half-yearly instalments of Rs.2.5 lakheach). Hence, under this column, only theoperative credit-limit, i.e., Rs.20 lakh will beshown and not Rs.25 lakh. If the operativelimit of an account is reduced to Rs.2,00,000or less, it will be reported in a consolidatedmanner in BSR-1B.

In the case of other loans, which have notbeen fully drawn, the sanctioned limit isindicated. The credit limit is not adjustedfor the unpaid or overdue instalments. If aborrower is sanctioned a composite creditlimit against more than one account, thelimit is split up in proportion to theoutstanding amounts and shown againstthe respective accounts. Where no specificcredit limit is sanctioned, the amountoutstanding is treated as the credit limit.

j. Amount Outstanding: The actual amountoutstanding (debit) in each account as atthe close of business on the reporting date,rounded off to the nearest thousands ofrupees is reported. If the account is havinga credit balance, the amount outstandingreported is Nil. The actual amount of creditbalance is not reported.

The information on accounts aggregated ondifferent characteristics, collected in BSR-1B return is as under:

In BSR-1B return, information in respectof accounts with credit limits of Rs.2,00,000and less is collected in a consolidated form.These accounts are further classified intotwo credit limit size-groups viz., ‘Rs.25,000and less’ and ‘Over Rs.25,000 and uptoRs. 2 lakh’. Accounts are grouped accordingto the occupational categories specified inthe format. The number of accounts, creditlimits and amount outstanding are totaledup for each of these occupational categoriesand given separately for the two credit limitsize-groups. Each occupation in BSR-1B isreferred as a item code. The item codenumbers in the format of BSR-1B forclassifying various occupational categorieshave been allotted 2-digit codes. A tablegiven in the Handbook* provides therelationship between BSR-1A occupationcodes (5-digit) and for BSR-1B item codes.

Asset classification of borrowal accountsreported in BSR-1B are consolidated for alloccupation categories and recorded againstitem codes 81 to 84, separately for eachsize-group, viz., ‘Rs. 25,000 and less’ and‘Over Rs.25,000 and upto Rs.2 lakh’. Theinformation on asset classification iscaptured for internal consistency and thisdata is not disseminated.

Information on Gender classification inrespect of borrowal accounts of Individualsreported in BSR-1B are consolidated againstitem codes 86 and 87, separately for eachsize-group.The information on genderclassification is not reported uniformly byall the branches and as such only thepercentage distribution is disseminated.

Basic Statistical Return (BSR) 2 – Type ofDeposit Accounts

This return relates to deposits. Branches/Officesof all Scheduled Commercial Banks in Indiafurnish information on number of employees,number of accounts and amount outstandingaccording to type of deposits and classificationof term deposits according to maturity, broadinterest rate ranges and size of deposits as on

* Handbook of Instructions on BSR 1 & 2 March, 2002.

34


31st March every year. All Administrative Offices,Regional and Zonal Offices and Branches/Offices without any deposits such as TrainingColleges, Lead Bank Offices, Service Branches,etc. furnish employment details in this return,even though they do not have deposits.

a. Employment details

All permanent and temporary full-time staff onthe rolls of the branch/office as on the date ofthe return are included. This relates to the actualstrength of the branch and not the sanctionedstrength. Part-time and casual employees areexcluded. The category wise staff position iscollected in the block on employment details.Category-wise number of female employees isalso reported against item code 101.

b. Part - l: Classification of Depositsaccording to Type

Through this part of the return information fromeach office is obtained on the deposits classifiedaccording to their type, viz., current, savings andterm deposits. The additional information ongender of account holder is also collected in thispart of the return. The information on differenttypes of deposits is collected under two broadownership categories, i.e. 1) Individuals and 2)Others. Individuals include Hindu UndividedFamilies. The data on categories such as Non-resident individuals, Farmers, Businessmen,Traders, Professionals and Self-employedpersons, Wage and salary earners, etc. arereported under this category. In case of jointaccounts under individual, the gender of the firstaccount holder is the deciding factor forclassifying the account under ‘Female’ category.The inter-bank deposits are excluded from totaldeposits. Three types of deposit accounts aredefined as follows:

(1) The scope of deposits reported in this part ofthe return is same as deposits reported in thefortnightly return submitted under section42(2) of the Reserve Bank of India Act, 1934.Interest accrued and payable on depositsshould be treated as ‘Other liabilities’ andshould not be included in BSR-2.

(2) Savings deposit shall mean a form ofdemand deposit which is a deposit account

whether designated as “Savings Account”,“Savings Bank Account”, “Savings DepositAccount” or other account by whatevername called which is subject to therestrictions as to the number of withdrawalsas also the amounts of withdrawalspermitted by the bank under their savingsaccount rules during any specified periodand would include special savings deposits.

(3) Term deposit shall mean a deposit receivedby the bank for a fixed period and which iswithdrawable only after the expiry of thesaid fixed period. At present, the termdeposits are deposits with a fixed maturityof not less than a specified period (whichis amended from time to time) or subjectto notice of not less than a specified period(which is amended from time to time). Theywould also include (a) deposits includinginter-bank deposits payable after 14 days’notice, (b) cash certificates, (c) cumulative,recurring, annuity or reinvestment deposits,(d) Kuri* and chit deposits, (e) certificatesof deposits, (f) non-resident deposits in thenature of term deposits, and (g) any otherspecial deposits in the nature of termdeposits. Interest accrued and payable onthese deposits are treated as ‘Otherliabilities’ and therefore not included in thispart of return.

(4) Current Account shall mean a form ofdemand deposit wherefrom withdrawals areallowed any number of times dependingupon the balance in the account or upto aparticular agreed amount and shall also bedeemed to include other deposit accountswhich are neither Savings Deposit nor TermDeposit; At present the Current accountscomprise (a) deposits subject to withdrawalon demand (other than savings deposits) orwith a maturity period of less than aspecified period (which is amended fromtime to time), or on notice of less than aspecified period (which is amended from

* Kuri or chit means a transaction by which foreman entersinto an agreement with number of subscribers. Everysubscriber shall subscribe a certain sum of money forcertain period. Each subscriber in his turn shall beentitled to a prized amount.

35

Banking Statistics

time to time), (b) call deposits withdrawablenot later than a specified period (which isamended from time to time), (c) unclaimeddeposits, (d) overdue fixed deposits, (e) creditbalance in cash credit and overdraftaccounts and (f) contingency unadjustedaccounts if in the nature of deposits. Itmust be noted that deposits from banks,UTI, LIC, etc., at call or short notice notexceeding 14 days are treated as borrowingsand are not included in this return.

(5) Staff security deposits, margin deposits andstaff provident fund deposits should beclassified under current or fixed depositsdepending upon payment of interest onsuch deposits.

c. Part - ll: Classification of Term Depositsaccording to Maturity

Information on outstanding amount of termdeposits as on the date of the return, classifiedaccording to the original period of maturity forwhich deposits have been placed with the branchby depositors is collected in this part.

d. Part - lll : Classification of Term Depositsaccording to Interest Rate Range

In Part III, outstanding amounts of term depositsare classified according to interest rate for whichdeposits have been placed with the branch bydepositors and outstanding as on the referenceperiod. These deposits are grouped under thedifferent interest rate ranges.

e. Part - lV: Classification of Term Depositsaccording to Size

In Part IV, outstanding amounts of term depositsare classified according to size of deposits whichhave been placed with the branch by depositorsand outstanding as on the reference period.These deposits are grouped under the differentsizes as per original deposit amount.

f. Part - V: Classification of Term Depositsaccording to Residual Maturity (ExcludingRRBs)

Information on outstanding amount of termdeposits as on the date of the return, classified

according to the residual period of maturity iscollected in this part.

2.1.2.1.1.3. Sources and Systems

The data on BSR 1 & 2 returns, as survey isdone on a census basis, are collected from eachbranch/office of the scheduled commercial banksin India. The Banking Statistics Division of theDepartment of Statistical Analysis and ComputerServices, Reserve Bank of India, is the nodaloffice for collection, compilation anddissemination of BSR 1and 2 data. Data aresubmitted in soft form by most of the banks,except some regional rural banks. Some banks,specially a few public sector banks and a fewnew private sector banks, have implementedintegrated software for their MIS, through whichthe BSR 1&2 data are generated directly. Thedata are received from banks in the followingmode: Paper Return (mostly from regional ruralbanks), Floppies/CDs and Emails. With moreand more banks computerising their branchesand implementing the integrated software andincreasing use of Internet, the data are beingreceived through email.

2.1.2.1.2 Basic Statistical Return – 4:Survey of Ownership of Deposits

The Basic Statistical Return (BSR)-4: Survey ofOwnership of Deposits of Scheduled CommercialBanks as on March 31, is an annual return,under the BSR system obtained from a sampleof branches, selected scientifically for the yearunder reference. The BSR-4 intends to capturecomposition and ownership pattern of deposits,with the objective of building up estimates onthe composition and ownership pattern ofdeposits at different levels of aggregation. Till1972, the annual Survey of Ownership ofDeposits was conducted to get data from HeadOffices of banks. It was replaced by BSR 4 returnfrom March 1976, which was received from allbranches. Ownership classifications were alsochanged from March 1976 survey. BSR 4 wascollected on sample basis for 1978 and 1980and on census basis for 1982. From 1984, itwas made biennial sample survey. The surveyhas been made annual from 1990.

36


2.1.2.1.2.1 Measurement needs of the area

The estimates arrived at through this survey arean important source of information on thechanges in profile and structural shifts incomposition and ownership pattern of depositswith Scheduled Commercial Banks (SCBs). Theyare utilized in the compilation of NationalAccounts Statistics (NAS), the Flow of FundsAccounts of the Indian Economy, Financialsaving of the Household sector, etc. Major usersof the survey results are the CSO, RBI,commercial banks and others, e.g., researchersand others.

An article presenting salient features of theresults of the BSR-4 survey is publishedannually in the RBI Bulletin. Various otherpublications also present data based on theresults of the BSR-4 survey.

2.1.2.1.2.2. Concepts, Definition andClassifications

Sampling Design Used for the March 2005 survey:A stratified sampling design was used forselection of branches of banks for this survey.Based on State/Union Territory, populationgroup of the centre where bank branch waslocated, and bank group, all branches of thescheduled commercial banks (SCBs) in thecountry were classified into 379 basic strata. Thepopulation groups are (i) rural; (ii) semi-urban;(iii) urban; and the metropolitan group, furthersub-divided into two groups (iv) four majormetropolitan centers (viz., Mumbai, Delhi,Chennai and Kolkata) and (v) the othermetropolitan centers. Five bank groups, viz., (i)State Bank of India and its Associates; (ii)Nationalised Banks; (iii) Regional Rural Banks;(iv) Other Indian Scheduled Commercial Banksand (v) Foreign Banks, were considered for thepurpose. If branches in a basic stratumnumbered 7 or less, all branches were selectedwith certainty in such strata. As an exception,all 9 branches operating in Lakshadweep Islandswere included in the sample to provide adequaterepresentation to this union territory. In theremaining basic strata, each stratum was furtherstratified into 2 or 3 sub-strata taking into

account the range in total deposits of thebranches in the strata and number of depositaccounts. For this purpose, threshold valueswere determined for each basic-stratum takinginto account above two characteristics.

In such basic strata, Size Class Strata (SCS) wereformed as per descending order of deposits. Thebranches having aggregate deposits greater thanthreshold value-I were included under SCS-I. TheSCS-II covered branches having aggregatedeposits between threshold value-I and thresholdvalue-II and the SCS-III included all thosebranches having aggregate deposits up to thethreshold-value-II. Thus, 912 Size Class Strata(ultimate strata) were formed.

The branches under SCS-I were included in thesample with certainty. In SCS-II and SCS-III ofeach basic stratum, sample branches wereselected by circular systematic sampling afterarranging the branches within the SCS indescending order of their aggregate deposits,subject to selecting a minimum of 2 branchesfrom each SCS. The sample size in the case ofSCS-II varied from about 20 to 50 per cent ofbranches (depending upon the total size of SCS).If the number of units (branches) exceeded 200,15 per cent of branches were drawn as samplingunits. In the case of SCS-III, 10 per cent samplewas selected.

Based on the above procedure, 9,933 brancheswere selected for the survey for March 2005. Inall, 2,292 bank branches were selected withcertainty. Out of the remaining 63,778 bankbranches, 7,641 branches were selected usingabove sampling design from sub-strata SCS IIand SCS III.

The deposits are classified into Current deposits,Savings deposits and Term deposits-Certificatesof Deposits (CDs) and Other Term Deposits, whilethe major economic sectors according to whichownership is to be classified are Governmentsector, Private corporate sector, Financial sector,Household sector and Foreign sector. Detaileddefinitions, as provided in the Guidelinesattached with the BSR-4 return, March 2005 are:

37

Banking Statistics

Current deposits comprise: (a) deposits subjectto withdrawal on demand (other than savingsdeposits) or with a maturity period of less than15 days (7 days in case of Rs. 15 lakh & above),(b) call deposits withdrawable not later than 14days; (c) unclaimed deposits; (d) overdue termdeposits; (e) credit balance in cash credit andoverdraft accounts and (f) contingencyunadjusted accounts, if in the nature of deposits.The inter-bank deposits at call or short noticenot exceeding 14 days are treated as inter-bankborrowings and not included in this return.However, inter-bank deposits in current accountare included. Savings deposits are depositsaccepted by banks under their savings banksdeposits rules and include deposits under SpecialSavings Schemes. Term deposits are depositswith a fixed maturity of not less than 15 days

(7 days in the case of Rs. 15 lakh & above), orsubject to notice of not less than 15 days (7days in the case of Rs. 15 lakh & above). Theyalso include (a) deposits including inter-bankdeposits payable after 14 days notice, (b) cashcertificates, (c) cumulative or recurring deposits,(d) kuri and chit deposits and (e) special depositsand certificates of deposits (CDs). Interestaccrued but not paid on these deposits is treatedas other liabilities and therefore not included inthis return. Certificates of Deposits (CDs) figuresare separately under term deposits. Any depositstreated as ‘other demand and time liabilities’ forthe purpose of fortnightly/ special return underSection 42 (2) are not reported in this return.

The coverage of the sectors classified in thisreturn is presented in Table 2.1.

Table 2.1: Coverage of the sector under BSR – 4 return

Major sector Sub-sectors Details/ illustrations

1 Government Central Government Central Govt. departments, departmentalsector undertakings, like Railways, P& T.

State Governments State Govt. departments, departmentalundertakings like, Road TransportUndertakings, etc.

Local Authorities Municipalities, Panchayti Raj institutions,Port Trusts

Quasi-Government Bodies Housing Boards, SEBs, ICAR, ICSSR.

Non-Departmental Public sector undertakings, STC, FCI,Commercial Undertakings State Warehousing Corporations

Others

2 Private Corporate Financial companiesSector

Housing Finance companies HDFC, Dewan Housing Finance, etc.

Auto finance companies Bajaj Auto Finance, Ashok LeylandFinance, etc.

38


Mutual Funds-private Kothari Pioneer, Apple Mutual Fund, etc.sector

Financial services Issue Management, Portfoliocompanies Management Companies, e.g.,

DSP Financial Consultants, etc.

Other financial Leasing companies, Hire-purchase, etc.companies

Non-Financial Non-Government companies, Companiescompanies managed (but not owned by Government)

engaged in Manufacturing, Trading, etc.,activities and registered under CompaniesAct 1956

Non-credit Co-operative Marketing, Housing, Industrial etc.,institutions co-operative societies

Others including Quasi- Non-Profit Institutions, Privately fundedCorporate Institutions educational institutions, e.g., CII, FICCI,like large educational etc.Institutions which arefunded privately

3 Financial sector Banks Indian Commercial Banks, Foreign Banks,Co-operative Banks and Credit societieslike PACS.

Other FIs.

Unit Trust of India

Mutual Funds Floated by FIS and commercial Banks.

Insurance Companies Includes both Life and Non-Life insurancecompanies.

Term Lending e.g., IFCI, SFCs, NHB.institutions

Provident Fund PF Commisssioners, TrusteesInstitutions of PFs., Staff PF of the Bank.

Others

4 Household sector Individuals - Includes HUFs and Joint Accounts of– Farmers; Individuals.– Businessmen, Traders,

Professionals and self-Employed;

– Wage and salary-earners-Shroffs, Money-lenders, etc.

– Others


39

Banking Statistics

Trusts, Associations, Clubs

Proprietary & partnershipconcerns

Educational Institutions

Religious Institutions

Others

5 Foreign sector Foreign consulates,Embassies, Trade missions,Information Services, etc.

Non-Residents Individuals and also overseas companies,firms, societies, OCBs, trusts, etc, ownedto the extent of atleast 60 per cent byNRIs or PIOs

Others Also includes non-resident banks.



The basic data for the survey flows from thebranches of scheduled commercial banks thatare selected in the sample for survey. The formatfor the BSR-4 return, together with guidelinesfor filling-in the same are provided to thereporting and controlling offices of the banks.The head/controlling offices of the banks submitthe returns (hard copy) along with data in softform to the respective regional office of DESACS,RBI. However, the banks or their branches thatcan directly extract the data from their systems,are provided file-structure so that they cansubmit the data without using our data-entrysoftware. Further, banks unable to use the data-entry software for certain reasons, are permittedto send data either in any acceptable form orsubmit only hard copies. The data so receivedare processed at DESACS, RBI, Mumbai, usingthe software developed in-house. The data areedited by putting them through rigorouscomputer programs to check their consistency,validity and integrity and wherever required,necessary corrections are carried out.

2.1.2.1.3. Basic Statistical Return – 5:Survey of Investments ofScheduled Commercial Banks

The Survey of Investments of ScheduledCommercial Banks, conducted through BSR 5,analyses the position of investments in India andabroad of Scheduled Commercial Banks(excluding Regional Rural Banks) as at the endof March annually. The investment portfoliocovers investments in securities issued byCentral and State Governments, private sectorcompanies, financial companies, banks, approvedfor the purpose of investments under the IndianTrusts Act, 1882; other domestic securities andinvestments; foreign securities and other foreigninvestments. Analysis of investments is doneaccording to bank groups, namely, State Bankof India and its Associates (SBI and itsAssociates), Nationalised Banks, Other IndianScheduled Commercial Banks (OSCBs) andForeign Banks in terms of instruments, maturity,interest rate (coupon) and states. BSR 5 returncommenced from March 1973 and replacedearlier survey on Bank Investments. Theproforma for reporting State-wise investmentswas also introduced in the revised survey.

40


2.1.2.1.3.1. Measurement needs of the area

The results of the survey capture the changesin the composition pattern of investments ofSCBs and thus provide valuable information onbanks investments according to type, maturityprofile, interest/ coupon rates and according tostates. Such information is useful to policy-makers, analysts, bankers and researchers.

An article presenting salient features of theresults of the BSR-5 survey is publishedannually in the RBI Bulletin. Various otherpublications also present data based on theresults of the BSR-5 survey.


The BSR-5 survey covers all the SCBs, excludingRRBs and Head offices of the banks submit thereturn. The exclusion of RRBs is due to their lowshare (about 2.8 per cent, as on end-March 2005)in total investments of all SCBs. The return seeksinformation on banks’ investments in Central andState Government securities; securities, otherthan Central and State Government securities,approved for the purpose of investments under theIndian Trusts Act, 1882; other domestic securities;foreign securities and other foreign investments. Inrespect of each category, the banks report theirinvestments in terms of face value, book value,and wherever applicable, market value and marketrate. Details of investments in shares, debenturesis called for separately for quoted and Non-quotedinstruments. A complete list of securities andother investments included in the survey isprovided in the return. This list is updatedannually. The concepts used for the surveybroadly refer to the Reserve Bank’s guidelines/instruction on Valuation, Classification andoperation of investments portfolios, as applicableto SCBs.


Head offices of scheduled commercial banks formthe basic source for the supply of data in BSR5. The format of the return, together withguidelines for filling-in the same are provided to

the head offices of the banks who submit thefilled-in returns to Central Office, DESACS, RBI.The head offices of the banks submit the paperreturns along with data in soft form. Softwaredeveloped for the purpose, is provided to thebanks for data entry. Further, the banks whichare unable to use the data-entry software forcertain reasons, are permitted to send data eitherin any acceptable form or submit only hardcopies. The banks also submit a copy of theirannual accounts/Balance sheet as on March 31.

Preliminary scrutiny of the returns is done withthe annual accounts as on March 31 so as toensure the two sets of data match, and afterreconciliation of the same, the data are processedat DESACS, RBI, Mumbai. Necessary referencesare made to banks to seek clarifications, beforedata processing. The data are edited by puttingthem through rigorous computer programs tocheck their consistency, validity and integrity andwherever required, necessary corrections arecarried out.

2.1.2.1.4. Basic Statistical Return – 6:Survey of Debits to DepositAccounts

The Basic Statistical Return (BSR)-6 which iscanvassed for the Survey of Debits to DepositAccounts with Scheduled Commercial Banks isa quinquinnial return under the BSR system.The return is submitted by the branches whichare selected in the sample for the year underreference. The BSR-6 intends to capture thevalue of debits to deposit accounts, with a viewto work out the rate of turnover of deposits,which is one of the important measures ofeconomic activity in the country as a whole. TheSurvey on Debit to Deposits account (form T-1)which was conducted till 1971-72 annually, wasnext conducted in 1974-75 on census basis andrenamed as BSR 6 return from 1985-86 asbiennial sample survey as per decision taken bythe Committee of Direction on Banking Statistics.Subsequently, the survey has been madequinquennial from the year 2000.The BSR-6survey covers the same branches as are selectedfor the BSR-4 survey for the year in which theBSR-6 survey is being conducted.

41

Banking Statistics


Debits to deposits accounts of banks representwithdrawals made by depositors either in theform of cheques or in cash. Comparison of thetotal of such withdrawals for a certain periodwith the average balances held by the depositorsin such accounts provides a measure of theextent to which depositors make use of the fundsin their bank accounts for making payments andthus are an important source of information.Major users of the survey results are theGovernment departments/Organisations, RBI,commercial banks and others, e.g., researchersand others. Information on cash debits (includingthose made through ATMs) is also being collectedin the survey for 2004-05 and is expected to bea useful source of data for policy purposes andresearchers.

An article presenting salient features of the resultsof the BSR-6 survey is published in the RBIBulletin. Various other publications also presentdata based on the results of the BSR-6 survey.


The data covered are quarterly outstandingbalances in Current and Savings Depositaccounts and approved limits in Cash Credit andOverdraft accounts and total debits (quarter-wise)and cash debits (quarter-wise) in above types ofaccounts. The Outstanding Balances/ approvedlimits are as on Last Friday of June, Septemberand December, and as on March 31 in case ofMarch quarter. Detailed definitions, are providedin the Guidelines attached with the BSR-6return. The definitions/concepts used in theBSR-6 for 2004-05 return are:

Inter-bank deposits / credit accounts of banks(whether commercial or co-operative, scheduledor non scheduled) are excluded entirely from thedata reported. Total debits (withdrawals) tocurrent deposit accounts, savings depositaccounts, cash credit accounts and overdraftaccounts during the quarters April-June, July-September, October-December and January -March are reported. Debits (withdrawals) madeby all means are covered. These cover debitsmade through cheques, in cash and also include

those made through ECS, ATMs, Internetbanking and other electronic banking channels.Debits through ATM are a subset of all debitsreported in Part on Total Debits. Savings andcurrent deposits include the amount of interestdue to the depositors. Current deposits includecredit balances in cash credit accounts, depositsrepayable at call or on notice of less than 15days, (7 days in case of deposits above Rs.15lakh), unclaimed deposits and fixed depositsmatured but not paid. Contingency andunadjusted accounts, if in the nature of deposits,are also included in current deposits. Margindeposits, staff provident fund and securitydeposits and interest due on these are excludedfrom the data furnished. Approved limits referto effective limits (drawing powers) in respect ofcash credits and overdrafts as on the last Fridayof the quarters April-June, July-September,October-December and as on 31st March forJanuary- March quarter even if such limits havenot been availed of. In the case of cleanoverdrafts, the full sanctioned limits are taken.As stated above, the sample branches areselected for the survey following the samesampling scheme described for BSR 4 wheneverthis survey is conducted.


The basic data for the survey flow from thebranches of scheduled commercial banks thatare selected in the sample for survey. The formatfor the BSR-6 return, together with guidelinesfor filling-in the same are provided to the selectedbranches through their head/controlling officesfor the particular year’s survey. The data to besubmitted through the return are extracted bythe branches from their system. The head/controlling offices of the banks submit the paperreturns along with data in soft form to theregional offices of DESACS, RBI. Softwaredeveloped, in FoxPro, for the purpose of dataentry, is provided to the banks. However, thesebanks or their branches, which can directlyextract the data from their systems, are providedfile-structure so that they can submit the datawithout using DESACS’s data-entry software.Further, certain banks which are unable to usethe data-entry software for certain reasons, are

42


permitted to send data either in any acceptableform or submit only hard copies. The data soreceived are processed at DESACS, RBI, Mumbaiusing the software developed in-house. The dataare edited by putting them through rigorouscomputer programs to check their consistency,validity and integrity.

2.1.2.1.5. Basic Statistical Return – 7:Quarterly Return on AggregateDeposits and Gross Bank Credit

The Reserve Bank of India was collectinginformation on aggregate deposits and grossbank credit of Scheduled Commercial Banks(including Regional Rural Banks) on monthlybasis through Basic Statistical Return (BSR) 7introduced in August 1974. The periodicity ofthe return was changed to quarterly from thequarter ended March 1984. These data onaggregate deposits and gross bank credit weredisseminated from the year 1981 through thepublication titled “Banking Statistics-MonthlyReturn on Aggregate Deposits and Gross BankCredit”. Subsequently, the data were publishedunder the title “Banking Statistics – QuarterlyHandout” from March 1984. The name of thepublication has further been changed to“Quarterly Statistics on Deposits and Credit ofScheduled Commercial Banks” from September2003. These publications provide the data ondeposits and credit, inter alia, according toStates/Districts/Centres/Population Groups/Bank Groups.


The information on the geographical distributionof aggregate deposits and gross bank creditbased on BSR 7 return serves as an importantinput to monetary policy and regionaldevelopment process. Besides, it serves as animportant input to analysis of banking potentialof different regions/centers. Reserve Bank,Commercial and Co-operative Banks andResearchers extensively use the BSR-7 data.These data are also an important input forpreparing material for replies to parliamentaryqueries and used by different committees set upby the government/RBI on various economicissues. The data are disseminated through

quarterly publication, which can also be accessedthrough Internet site of the Reserve Bank.


The BSR-7 return is a simple return whereinthe head/controlling offices of banks reportbranch/office-wise quarterly data on aggregatedeposits and gross bank credit as on thereference date, which is the last Friday in thecase of June, September and December quartersand March 31 in the case of March quarter. TheAggregate Deposits represent demand and timeliabilities of a bank (excluding inter-bankdeposits and India Millennium Deposits). TheGross Bank credit represents bank credit(excluding interbank advances) as per Form Areturn under Sec 42(2) of RBI Act, 1934, togetherwith outstanding amount of bills rediscountedwith Reserve Bank of India and FinancialInstitutions. A Centre is defined as the revenueunit classified and delineated by the respectiveState Government, i.e., a revenue village/city/town/municipality/municipal corporation, etc.,as the case may be, in which the branch issituated. The Population Group classification ofbanked Centres is based on 1991 Census. ThePopulation Groups are defined as under:

i) ‘Rural’ group includes centres withpopulation of less than 10,000,

ii) ‘Semi-urban’ group includes centres withpopulation of 10,000 and above but lessthan 1 lakh,

iii) ‘Urban’ group includes centres withpopulation of 1 lakh and above but lessthan 10 lakhs, and

iv) ‘Metropolitan’ group includes all centreswith population of 10 lakhs and above.


The basic data for the survey flow from thebranches/offices of scheduled commercial banks.The head/controlling offices of the banks arrangeto obtain data from their branches/offices andafter preliminary scrutiny submit the same toDESACS, RBI. For the purpose of data entry,software developed in FoxPro for the purpose, is

43

Banking Statistics

provided to the banks. However, some banks ortheir branches are allowed to extract the datafrom their systems, and are provided file-structure so that they can submit the datawithout using DESACS data-entry software.Further, if banks are unable to use the data-entry software for certain reasons, then they arepermitted to send data either in any acceptableform or submit hard copies.

The data so received are processed at DESACS,RBI, Mumbai using the software developed in-house. The data are edited by putting themthrough rigorous computer programs to checktheir consistency, validity and integrity andwherever required, queries are forwarded tobanks and after obtaining their replies, necessarycorrections are carried out.

2.1.2.1.6. Ensuring Quality Standards ofBSR data

On the processed data reported under BSR 1and BSR 2 returns, various code-validation andinter-consistency checks are performed such as(i) branch-wise totals are tallied with BSR-7 datato check large dimensional variations; (ii)checking large growth / decline as compared topast year data; (iii) examining outliers (out ofrange) – very large/ small values; (iv) locatelogical inconsistencies (a combination of codes/attributes appearing together); and (v) bank-wisetotals are tallied with Section 42(2) and banks’annual report data. The inconsistency reportsare sent back to the banks for gettingclarification/feed-back/ corrected/revised data.The final results are also checked with the othersources of data published by RBI.

To ensure receipt of good quality data obtainedin BSR returns, besides vigorous follow-up, work-shops and meetings are arranged periodically totrain the bank personnel and to impress uponthem the need to submit complete, accurate andtimely data. The workshops also dwell uponcommon errors/discrepancies observed in earliersurveys as also provide demonstration/hands-on sessions on data entry software. To ensurecorrect data entry, various validation andconsistency checks are in-built into the dataentry software. Cleaning of data is done in-house

and its consistency is cross-checked at differentlevels of aggregation with the data emanatingfrom other returns. Further, the preliminarytabulations are examined in the light of othermacro-economic developments to ensureconsistency in the survey results.

2.1.2.2. International Banking Statistics

Importance of maintenance and timelydissemination of quality and adequate data onexternal transactions have been felt necessaryby regulatory authorities, both national andinternational, for efficient functioning of theglobal financial system. This helps to identifyand analyze the undercurrents in theinternational financial markets. Thus, thedevelopment of appropriate data of high qualityand management thereof has to be a vitalfunction of all central bank authorities. The crisisin East Asia, in particular, brought into sharpfocus the need for collection of timely andcomprehensive data on international exposuresof banks and the size and structure ofinternational debt positions.

In India, with the growing liberalization of theexternal sector, close monitoring, on an ongoingbasis, of the cross-border flow of funds hasassumed critical importance. This calls forconcerted efforts to collect the data oninternational claims and liabilities of the bankingsector. At present, banks in India provide variousdetails of their operations in India as well asabroad to different departments in the RBI tomeet the specific requirement of the departmentsconcerned. While a lot of information flows todifferent departments of the RBI to cater to theirspecific needs, these are not adequate formeeting the international standards as well asfor participating in the International BankingStatistics (IBS) collected and published by theBank for International Settlements (BIS). The IBSsystem of the BIS mainly designs to collect/compile/provide information on banks’ external/international liabilities and assets vis-à-vis (a)non-residents in any currency and (b) residentsin foreign currency. Under the system, theinformation from scheduled commercial bankson disaggregated items such as, loans, deposits,investments, borrowings, other assets and other

44


liabilities with details into currency (domestic andforeign currencies), sector (banks, non-bankpublic and non-bank private) and country(individual countries, international institutionsand monetary authorities) is compiled atquarterly intervals.

For the above purpose, RBI constituted aWorking Group on International BankingStatistics to suggest, inter alia, a comprehensivereporting mechanism, to enable India’sparticipation in the IBS system of the BIS. Asper the recommendations of the Working Group,the requisite detailed data on international assetsand international liabilities of banks are beingcollected from banks on quarterly basis sinceDecember 1999. A Standing Monitoring Group(SMG) representing senior officers of the RBI andcommercial banks has been monitoring theimplementation of the recommendations of theWorking Group on International BankingStatistics. The SMG is an ongoing body andreconstituted once in two years.

Since March 2001 quarter, the consolidated dataof banks in India in the form of 23 statements(18 locational banking statistics (LBS) and 4 (5from March 2006) consolidated banking statistics(CBS)) are being supplied regularly to the BISon quarterly basis. The BIS started incorporatingIndia’s IBS data from December 2001 quarterand as a result, India became the third amongall developing countries in the world complyingwith the BIS requirements of compilation of IBS.While the BIS publishes (www.bis.org)consolidated data of all reporting countries, theRBI publishes consolidated data on IBS of Indiain the form of article in the RBI Bulletin(www.rbi.org.in). The BIS publishes consolidatedstatistics of all reporting countries regularly inthe “BIS Quarterly Review- International Bankingand Financial Market Developments” and “The BISConsolidated Banking Statistics”. Apart from theBIS, international organizations and centralbanks in other countries have been usingcountry specific detailed data for furtherinvestigations.

In order to improve upon the coverage of data,the BIS revised its guidelines for consolidated

banking statistics (CBS) by increasing thecoverage of products/instruments, namely,derivative contracts, guarantees, creditcommitments, etc., modifying its reportingformats and increasing the number of CBSstatements (from 4 to 5). The newly introducedCBS statement present - (i) the consolidatedinternational claims by country and sector ofultimate risk, and (ii) instrument wise (viz.,derivative contracts, guarantees, creditcommitments) outstanding amounts by countryof ultimate risk. There is only one return i.e.,IBS Return, in India for collating both kinds ofstatistics viz., LBS and CBS. In the light of therevised guidelines of the BIS and certainobservations recorded, for enhancement of thesystem, during the course of implementation ofthe IBS system of BIS in India, the Guide toIBS for banks in India and Indian banks’ officesabroad was revised/modified. The revised systemhas been implemented from the reporting quarterMarch 2005. The following are the majorrevisions/modifications.

i) The asset/liability codes have beenmodified to capture data on financialinstruments, viz., Derivatives, Letter ofCredits, guarantees and creditcommitments.

ii) The banks/branches had been reportingthe outstanding ‘amount/balance’ and‘accrued interest’ in rupee terms. Now,the outstanding amount/balance andaccrued interest are also reported interms of currency of the account.

iii) The sectoral classification has also beenmodified by reducing the number ofcategories to 8 [two for banks viz., BankOwn Office and Bank Other’s Office, onefor Official Monetary Authorities, one forGovernment, three for Non-bank and onefor cash collateral (applicable only forsector of ultimate risk)] as compared tothe earlier sector classification into 12categories (8 codes for banks based onvarious criteria viz., ownership, locationof head office and own/other bank’soffice, one code for official monetaryauthorities and three codes for non-

45

Banking Statistics

banks, viz., non-bank public sector, non-bank private sector and non-bank others).

iv) In comparison to the existing reportingof information on six currencies, viz., USDollar, Euro, Japanese Yen, Swiss Franc,Pound Sterling and Domestic Currency(Indian Rupee), and all other currenciesclubbed under residual category ‘OTH’,the revised system requires reporting, foritems other than derivatives, of thecurrency of account/transaction as ISOcurrency code. It would require reportingof information on 25 currencies includingIndian Rupee and remaining foreigncurrencies under residual currencycategory “OTH”. However, for reporting ofderivatives from branches to their RO/ZO/LHO/HO, the currency of settlementsof the derivative contracts are reportedas ISO currency code. A list of about 161currencies and their ISO codes areprovided in Annex-2.5. The currency ofsettlements, along with country of thecounter-party, are reported for thepurpose of netting, if applicable, at HeadOffice.

2.1.2.2.1. Measurement needs of the area

The IBS provides an understanding of the totalmagnitude of international assets and liabilitiesof the banking system and their composition,mainly in terms of sector (bank, non-bank),residual maturity, currency and country ofresidence. International assets / liabilities coverclaims/liabilities of reporting banks with/towardnon-residents in any currency and residents onlyin foreign currency.

The IBS data are primarily compiled to complywith the BIS requirement. The BIS releases(www.bis.org) international liabilities and assetsposition of banks of member countries on aquarterly basis through their publications viz., (i)Consolidated Banking Statistics and (ii) BISQuarterly Review: International Banking andFinancial Market Developments. The IBS datacompiled by the BIS are used by the central banksof member countries, international organizations

e.g., IMF, etc. The methodology of compilation ofLBS/CBS and explanation to various terms usedin IBS are provided in Annex 2.6.

2.1.2.2.2. Concepts, Definitions andClassifications

The definitions of various items used in IBS aregiven below:

Reporting Country: The term “reporting country”refers to the country, which compiles andprovides IBS data to the BIS. Here, India is thereporting country and any country other thanIndia is foreign country.

Local Currency and Non-Local Currency: Local ordomestic currency is the currency of the countrywhere the banking office is located. Thecurrencies other than domestic are termed asnon-local or foreign currencies. Here, in India,Indian Rupees (INR) is the local or domesticcurrency and all other currencies are foreigncurrencies.

International Assets and International Liabilities:Balances in the accounts of the ledgersmaintained with the branch, representing assetsplaced with (or claims on) and liabilities towards(i) non-residents in any currency (i.e., foreigncurrencies and domestic currency); and (ii)residents in foreign currencies are treated,respectively, as international assets andinternational liabilities.

Who are Treated as Non-Resident: For thepurpose of these statistics, non-resident means:

i) An individual permanently residentoutside India,

ii) An individual who has stayed or intendto stay outside India for a period asstipulated in the FERA guidelines orguidelines issued under FEMA,

iii) An individual normally resident outsideIndia who is temporarily resident in India,

iv) Student or an individual undergoingmedical treatment, who is a foreignnational, irrespective of the length of hisstay in India,

46


v) A company/firm/institution locatedoutside India,

vi) Diplomatic missions and personnel,irrespective of length of their stay inIndia.

Items of Information captured in IBS: Thebranches of banks in India report to their head/principal offices the following items relating tointernational assets/liabilities:

Country (Code) of Residence of the reportingbranch (“IN” for the branches in India),

Broad Category of Asset/Liability,

Type of Asset/Liability under Category,

Currency of Account/Transaction/Settlement as an ISO Currency Code,

Country of Borrower/Customer as an ISOCountry Code,

Sector of Borrower/Customer as a SectorCode,

Residual Maturity as a Maturity Code,

Country of Ultimate Risk as an ISO CountryCode,

Sector of Ultimate Risk as Sector Code,

Balance in terms of Currency of Account/Transaction (MTM value of derivatives interms of US Dollar, irrespective of currencyof settlement),

Accrued Interest in terms of Currency ofAccount/Transaction (this should be Zero/Nil if the accrued interest is already reflectedin the Balance Amount),

Balance in Accounts/MTM Value ofDerivatives in terms of Equivalent IndianRupee, and

Accrued Interest in terms of EquivalentIndian Rupee (this should be Zero/Nil if theaccrued interest is already reflected in theBalance Amount).

Country of Residence of the Reporting Branch:Country of residence of the reporting branch/office means the country where the reportingbranch is located. All reporting branches inIndia, including branches of foreign banks,should provide the value as “IN” (“IN” is the ISOcountry code for India). The ISO country codesare provided in Annex 2.7.

Classification of International Assets / Liabilities under various categories and type

A. INTERNATIONAL ASSETS

Asset Category Asset Type Description Type CodeCategory Code (ALCD) (TYPECD)

Loans to Non-residents 11

International Foreign Currency Loan to Residents 12

Loans and 11 Outstanding Export Bills 21

Deposits Foreign Currency in hand, Travelers Cheques, etc. 41

NOSTRO Balances and Placements Abroad 51

International Investment in Foreign Government Securities 11Holdings of 21

Investment in Other Debt Securities Abroad 12Debt Securities

International31

Investments in Equities Abroad 11

Other Assets Other International Assets 21

47

Banking Statistics

B. INTERNATIONAL LIABILITIES

Liability Category Liability Type Description Type CodeCategory Code (ALCD) (TYPECD)

FCNR (B) 11

Residents Foreign Currency (RFC) Deposits 12

Exchange Earners’ Foreign Currency (EEFC) A/Cs 13

Other FC deposits 14

Borrowings 41

International Balances in VOSTRO Accounts 51

Deposits and 51 Non-Resident External (NRE) Rupee Accounts 52

Loans Non-Resident Ordinary (NRO) Rupee Accounts 55

Embassy Accounts 57

Foreign Institutional Investors’ (FIIs) Accounts 58

ESCROW Accounts 59

Own Issues of International Bonds (IMDs of SBI, etc.,) 11

International 61 FRNs (Floating Rate Notes) 12

Debt Securities Other Own Issues, if any, of International Debt 13Instruments

International GDRs/ADRs (issued by the reporting banks) 11

Other Liabilities 71 Rupee Equities of banks held by NRIs/OCBs 12

Other international liabilities 13

C. DERIVATIVES, LETTER OF CREDITS, GUARANTEES AND CREDIT COMMITMENTS

Derivatives,

Letter of Credits, Derivatives 11

Guarantees and 81 Letter of Credits 21

Credit Guarantees 31

Commitments Credit Commitments 41

Currency of Account/Transaction/Settlement(Curcd): The banks/branches report, for itemsother than derivatives, the currency of account/transaction as ISO currency code provided below.For reporting of derivatives from branches totheir RO/ZO/LHO/HO, the currency ofsettlements of the derivative contracts arereported as ISO currency code as provided inAnnex 2.5. Although, the MTM values ofderivative contracts are reported in terms ofequivalent US Dollar and Indian Rupee, thecurrency of settlements, along with country ofthe counter parties, are reported for the purposeof netting at Head Office.

While recording rupee equivalent amount forforeign currency accounts/transactions, banksin India use notional exchange rates for variouscurrencies. The notional exchange rates varyfrom bank to bank and the differences betweenmarket rate and notional rate for certaincurrencies are very high. Accordingly, thecurrency of accounts/transactions along withamounts/balances/interests in terms of currencyof accounts/transactions (US dollar equivalentamounts/balances/interests in the case ofcurrency of account/transaction is “OTH”) andrupee equivalent amounts/balances/interests,calculated at notional rates, are reported in the

48


IBS. While rupee equivalent amounts calculatedat notional rates would help the banks to tallywith their ledgers, the foreign currency amountswould be converted into equivalent US Dollar atmarket rates uniformly for all banks at the RBIfor reporting to the BIS.

Country of Residence of Borrower/Customer(COUNCD): The country code of the country ofresidence of the person/entity (bank, corporate,individual, institution, etc.,) with whom bank hasassets or towards whom bank has liabilities isreported as ISO Country Code. In other words,the country of residence of borrower/customermeans the country of the person/entity in whosename the account is maintained in the books ofthe bank/branch. The resident country of theborrower/customer is also called as “Country ofImmediate Risk”. The country information isreported as per the ISO country code listed inAnnex 2.9.

Sector of Borrower/Customer (SECTCD): Thesector of borrower/ customer, with/towardswhom bank/branch has asset/liability, isreported as sector code provided below. Also, thesame set of codes is applicable for allocating“Sector of Guarantor (Ultimate Risk)” (S_U_CD).In addition to these codes, the code “35” is usedas sector of ultimate risk for “Cash Collateral”.

SectorCLASSIFICATION OF SECTOR Code

(SECTCD)

Bank - Own Branch/Office 11(i.e., Assets/Liabilities of reportingbanks with/towards their OWNbranch/office)

Bank - Branch/Office of Another 12Bank(i.e., Assets/Liabilities of reportingbanks with/towards branch/officeof ANOTHER bank. This includesassets/liabilities with/towards certainInternational Organizations). For theinternational organizations, thecountry code should be furnishedas ZZ and NOT as per the locationof country of the organization. Alist of international organizationsis provided in Annex-2.10.

Official Monetary Authorities 21(i.e., Assets/Liabilities of reportingbanks with/towards Central Banksof various countries, MultilateralDevelopment Banks, etc). A list ofofficial monetary authorities isprovided in Annex-2.9.

Bank for International 22Settlements (BIS), EuropeanCentral Bank (ECB)(i.e., Assets/Liabilities of reportingbanks with Bank for InternationalSettlements (BIS), EuropeanCentral Bank (ECB), etc).

Governments 25(i.e., Assets/Liabilities of reportingbanks with/towards Central, Stateor Local Governments, GovernmentDepartments)

Non-Bank – Public Sector 30Undertakings(i.e., Assets/Liabilities of reportingbanks with/towards companies/institutions other than banks inwhich share holding of state/central governments is at least 51per cent). This includes assets/liabilities with/towards certainInternational Organizations. For theinternational organizations, thecountry code should be furnishedas ZZ and NOT as per the locationof country of the organization.

Non-Bank – Private Sector 31(i.e., Assets/Liabilities of reportingbanks with/towards Joint Stock andPrivate/Public Limited Companies)

Non-Bank – Others 32(i.e., Assets/Liabilities of reportingbanks with/towards individuals,HUFs, etc.)

Cash Collateral 35(This could be furnished as Sector ofUltimate Risk, if the banks exposureis against the cash collateral)

Unallocated 40(In case of fixed assets, where thesector cannot be determined, thesector should be assigned to thisresidual category.)

SectorCLASSIFICATION OF SECTOR Code

(SECTCD)

49

Banking Statistics

Country of Ultimate Risk (C_U_CD): This isapplicable only for Asset items, Derivatives,Letters of Credit, Guarantees and CreditCommitments. The Country of Ultimate Risk isthe country in which the guarantor of a financialclaim resides (for individuals) and/or the countryin which the head office of the guarantor entity(bank, public/private organization, etc.,) islocated. The same set of ISO country codesshould be used for allocating Country of UltimateRisk Codes.

Sector of Ultimate Risk Code (S_U_CD): The Sectorof Ultimate Risk is defined as the sector of theguarantor of a financial claim. This is applicableonly for Asset items, Derivatives, Letters ofCredit, Guarantees and Credit Commitments.The same set of sector codes as provided shouldbe used for allocating Sector Codes of UltimateRisk.

Residual Maturity Code (MATCD): ResidualMaturity as on reporting date means theremaining maturity period, which is calculatedby taking the difference between the date ofmaturities of international assets/liabilities andreporting date of IBS data. Residual maturity ofasset/liability is reported as per the followingclassification:

Residual Maturity Classification ResidualMaturity

Code(MATCD)

Up to and inclusive of six months 1[Includes the accounts/transactions(saving/current deposits, etc.,)where amounts are received/paidon demand]

Over six months but up to and 2inclusive of one year

Over one year but up to and 3inclusive of two years

Over two years 4

Unallocated [In certain cases, like, 5investment in equity shares (in FC/abroad), participations, fixed assetsabroad, etc., residual maturitycannot be determined and theseshould be reported as unallocated.]

Outstanding Amount in Terms of Currency ofAccount (FC_BAL): The outstanding balance inthe account, in terms of currency of accountOR the marked to market (MTM) value ofderivative contracts in terms of US Dollar, as atthe end of reporting quarter are reported againstthis item.

Accrued Interest in Terms of Currency of Account(FC_INT): If the interest accrued up to the endof the reporting quarter is already debited/credited to the outstanding balance of theaccount, then ‘0’ (zero), otherwise, the accruedinterest is calculated in terms of currency ofaccount/transaction and reported separatelyunder this item.

Outstanding Amount in Terms of Indian Rupee(RS_BAL): The outstanding balance in theaccount (as it appears in the ledger in terms ofIndian Rupee) OR the marked to market (MTM)value of derivative contracts as at the end ofthe reporting quarter, in terms of Indian Rupee(INR) is reported against this item after roundingoff to Rupee.

Accrued Interest in Terms of Indian Rupee(RS_INT): If the interest accrued up to the endof the reporting quarter is already debited orcredited to the outstanding balance of theaccount then ‘0’ (zero), otherwise, accruedinterest amount, in terms of Indian Rupee (INR),is reported after rounding to Rupee.

Reporting Conventions:

All amounts under Assets and Liabilities, on-and off- balance sheet items, are reported withpositive sign EXCEPT credit balances in MIRRORNOSTRO Accounts, debit balances in VOSTROAccounts, loan/cash credit/over draft accountsand negative MTM values of Derivative contracts.

Reporting of Balance Amount in NOSTROAccounts: Balances in NOSTRO accounts arereported as per local books, i.e., as per mirrorbook of NOSTRO accounts. The Credit balancesare reported with –ve sign, which is clubbedunder Overseas Borrowings (i.e., Liabilities).

Reporting of Balance Amount in VOSTROAccounts: Debit balances in VOSTRO accounts

50


are reported with –ve sign, which are clubbedunder Lending to Non-Residents (i.e., Assets). Inthis case Country & Sector of Ultimate Risk Code(i.e., C_U_CD & S_U_CD) are furnished.

The system of International Banking Statistics(IBS) as pursued by the Bank for InternationalSettlements (BIS) is expected to reduce theinadequacies in data and data gaps in theinternational assets and liabilities of the banksin India. The IBS system of reporting comprisestwo sets of tabulations viz., Locational BankingStatistics (LBS) and Consolidated BankingStatistics (CBS). The features of LBS and CBSare summarized below:

Locational Banking Statistics (LBS): The locationalbanking statistics provide for the collection ofdata on the positions of all banking officeslocated within the reporting area. The ‘reportingarea’ is used to refer to the countries, whichsubmit IBS data to the BIS. Such offices reportexclusively on their own (unconsolidated)business, which thus include internationaltransactions with any of their own affiliates(branches, subsidiaries, joint ventures) locatedeither inside or outside the reporting area. Thebasic organizing principle underlying thereporting system is the residence of the bankingoffice. This conforms to balance of payments andexternal debt methodology. In addition, data onan ownership or nationality basis are alsocalculated by regrouping the residence-baseddata according to countries of origin.

The LBS comprises 18 statements, of which 8statements represent Instrument-wise (viz.,International Loans and Deposits, InternationalHoldings/Own Issues of Debt Securities andInternational other Assets/Liabilities)international assets and liabilities of the bankingsector by country and sector of borrower andcurrency, the 10 statements represent majorcurrency – wise international assets andliabilities of reporting banks according to theircountry of incorporation and sector of borrower.

Consolidated Banking Statistics (CBS): Theconsolidated banking statistics are designed toprovide comprehensive and consistent quarterlydata on banks’ financial claims, i.e., assets sideof balance sheet, on other countries on two

different bases. While the first set of statisticscollects data on an ultimate risk basis, i.e.,allocated to the country where the final risk lies,for assessing country credit risk exposures, thesecond set of statistics collects data on animmediate borrower basis, i.e., allocated to thecountry where the original risk lies, for providinga measure of country transfer risk. The datacover on and off- balance sheet claims reportedmainly by domestic banks, including theexposures of their foreign offices (i.e., subsidiariesand branches), and are collected on a worldwide-consolidated basis with inter-office positionsbeing netted out.

The CBS comprises 5 statements, of which 4statements represent country (on immediate riskbasis) and sector of borrower, and residualmaturity-wise international/foreign claimsaccording to the type of reporting banks (viz.,domestic banks, inside area banks [foreign banksincorporated in the countries submitting IBS tothe BIS), outside area banks (foreign banksincorporated in the countries NOT submittingIBS to the BIS)], the last statement representscountry (country of ultimate risk) and sector –wise foreign claims and the claims arising fromderivatives, guarantees and credit commitments.

Allocation and Reporting of Immediate/UltimateRisk: Reporting domestic banks provideinformation on the volume of their cross-borderfinancial claims, and the local claims of theirforeign offices in any currency, that has beenreallocated from the country of the immediateborrower to the country of ultimate risk as aresult of guarantees, collateral and those creditderivatives that are part of the banking books.The risk reallocation also includes that betweendifferent economic sectors (banks, public sectorand non-bank private sector) in the samecountry. The risk reallocation also covers loansto domestic borrowers, which are guaranteed byforeign entities and, therefore, represent inwardrisk transfers, which increase the exposure tothe country of the guarantor. Equally, foreignlending which is guaranteed by domestic entities(e.g., a domestic export credit agency) is reportedas an outward risk transfer, which reduces theexposure to the country of the foreign borrower.

51

Banking Statistics

If all outward and inward risk transfers were tobe reported, they would add up to the same total.However, because in the case of risk reallocationsfrom or to a reporting bank’s home country onlythe part relating to the foreign counter-partycountry is reported, inward and outward risktransfers may not necessarily add to the sametotal. Similarly, the issuer (or protection buyer)of credit-linked notes and other collateralizeddebt obligations and asset-backed securities onlyreport an outward risk transfer and no inwardrisk transfer because he is perceived to havereceived cash collateral which extinguishes theexposure to his original claim.

Local Assets and Local Liabilities in LocalCurrency of Domestics Banks’ Foreign Affiliates:Head offices of banks in the reporting areaprovide data on the local assets and liabilitiesin local currency of their affiliates in othercountries on a gross basis. In the revised system,while the data on local liabilities in localcurrencies are reported on gross basis (i.e., onerecord only), the data on local assets in localcurrency are reported with details of country &sector of borrower, country & sector of guarantor,currency, residual maturity, etc. The consolidatedbanking statistics, though measures only claim,are a counterpart to borrowing countries’liabilities and, thus, can be aggregated toconstruct a measure of international debt owedto banks.

Derivative Contracts: Reporting domestic banksprovide consolidated data on the cross-borderfinancial claims (i.e., positive market values)resulting from derivative contracts of all theiroffices worldwide and the financial claims fromderivative contracts of their foreign offices vis-à-vis residents of the countries where the officesare located, independent of whether thederivative contracts are booked as off- or on-balance sheet items. The data are reported on aconsolidated and ultimate risk basis, i.e., inter-office positions are netted out and the positionsare allocated to the country where the final risklies.

The data cover in principle all derivativecontracts that are reported in the context of theBIS regular OTC derivatives statistics. The data

thus mainly comprise forwards, swaps andoptions relating to foreign exchange, interest rate,equity, commodity and credit derivativecontracts. However, credit derivatives, such ascredit default swaps and total return swaps, areonly to be reported under the item “Derivativecontracts” if they are held for trading by aprotection buying reporting bank. Creditderivatives, which are not held for trading, arereported as “Risk transfers” by the protectionbuyer and, all credit derivatives are reported as“Guarantees” by the protection seller.

Guarantees and Credit Commitments: Reportingdomestic banks provide data on guaranteesoutstanding vis-à-vis non-residents of all theiroffices worldwide and the exposures of theirforeign offices from guarantees vis-à-vis residentsof the countries where these offices are located.Similar data should also be provided separatelyfor credit commitments outstanding. Both typesof data are reported on a consolidated andultimate risk basis, i.e., inter-office positions arenetted out and - except when the exposure ismitigated by cash collateral or by exposure to aresident (i.e., home country) third party, in whichcase no foreign exposure is reported - thepositions should be allocated to the countrywhere the final risk lies.

Guarantees and credit commitments are reportedto the extent that they represent the unutilizedportions of both binding contractual obligationsand any other irrevocable commitments. Thesecover only those obligations which, if utilized,would be reported in total cross-border claimsand local claims of foreign offices in anycurrency. Performance bonds and other formsof guarantee are reported only if, in the event ofthe contingency occurring, the resulting claimwould have an impact on total cross-borderclaims and local claims of foreign offices in anycurrency. A more detailed definition ofguarantees and credit commitments and a non-exhaustive list of typical instruments that qualifyas guarantees and credit commitments areprovided below.

Guarantees: Guarantees are contingent liabilitiesarising from an irrevocable obligation to pay toa third party beneficiary when a client fails to

52


perform some contractual obligation. Theyinclude secured, bid and performance bonds,warranties and indemnities, confirmeddocumentary credits, irrevocable and standbyletters of credit, acceptances and endorsements.Guarantees also include the contingent liabilitiesof the protection seller of credit derivativecontracts.

Credit Commitments: Credit commitments arearrangements that irrevocably obligate aninstitution, at a client’s request, to extend creditin the form of loans, participation in loans, leasefinancing receivables, mortgages, overdrafts orother loan substitutes or commitments to extendcredit in the form of the purchase of loans,securities or other assets, such as backupfacilities including those under note issuancefacilities (NIFs) and revolving underwritingfacilities (RUFs).

Other Reporting Conventions

Netting of Assets: International assets andliabilities are, in principle, reported on grossbasis i.e., bank’s assets and liabilities vis-à-visthe same counter-party are reported separately,NOT netted one against the other. However, forreporting of derivatives, while branches submitcounter- party and contract-wise marked tomarket (MTM) values on gross basis to their HO/PO, the HO/PO of banks do netting for acounter-party where specific legally enforceablebilateral netting arrangement such as InternationalSwaps and Derivative Association (ISDA) masteragreement, etc., exists before summarizing thedata on derivatives.

Valuation: International claims in the form ofloans and receivables originated by the bank andnot held for trading as well as held to maturityinvestments be in principle valued at face valueor amortized cost price. Financial assets availablefor sale and held for trading are valued at marketor fair values. Contingent liabilities resulting fromguarantees and credit commitments are valuedat face value or the maximum possible exposure.The procedure for valuation and reporting ofderivatives is given in Annex 2.10.

Arrears of Interest and Principal: Until they arewritten off, interest in arrears on international

claims and principal in arrears (includingcapitalized interest) are reported/included in thedata on international assets/claims.

Provisions: Financial claims against whichprovisions have been made are normally reportedas foreign assets at their gross value. However,accounting rules may require in certain instancesthat these claims be reported on a net basis ifthere is an identified loss.

Write-Offs of Claims and Debt Forgiveness:Although an asset that has been written off maystill be a legally enforceable claim, it is excludedfrom the reporting.

Currency Conversion: The banks/branches report,for items other than derivatives, the outstandingamounts/balances and accrued interest in termsof currency of the account/transaction as wellas in equivalent rupee terms. The positions interms of currency of the account/transactionreported by banks are converted in terms of USDollar by the RBI at the exchange rate prevailingon the reporting date, for the purpose ofreporting to the BIS. For derivatives, noconversion is required as the banks/branchesreport the MTM values of derivative contracts interms of equivalent US Dollar as well as IndianRupee terms, irrespective of currency ofsettlement.


Source of Data: The required/relevant data itemsare available in the account ledgers of thebranch, under assets and liabilities, which arefurther divided into different ledgers. On the firstfolio of any account the information relating tothe account holder such as name, address,maturity date, etc., and nature of the accountis recorded. Besides, balance in the account asat any given date is also available in the balancecolumn.

The Reporting System: The Reporting Systemunder IBS involves branches, head/principaloffices (HOs/POs) of banks and the RBI. TheReporting System comprises:

Branches/Offices of Banks: The branches/officesof banks (Indian banks and Foreign banks)operating in India from the source which report

53

Banking Statistics

account-wise data on international assets,international liabilities and the claims arisingfrom derivatives, guarantees and creditcommitments; and provide summarized data tothe HOs/POs. The reporting branches/officesmay submit summarized data to their RO/ZO/LHO or directly to the HO/PO depending uponthe arrangements of the banks concerned. Also,foreign branches of Indian banks prepareaccount-wise data on international assets andclaims arising from derivatives, guarantees andcredit commitments and provide summarizeddata to the HOs/POs.

Head/Principal Office of Banks: The HO/POprocess and consolidate the data of branchesand forward bank level summarized data to theRBI,

Reserve Bank of India: The IBS data receivedfrom banks’ HO/PO are processed to arrive atthe consolidated positions for all reporting banksin India. Based on final consolidated IBS dataof all reporting banks in India, LBS and CBSstatements are generated and supplied to theBank for International Settlements (BIS).

For the purpose of securing bank level IBS datafrom banks in India, a senior level officer fromeach of the banks concerned, nominated by thebanks, is acting as Nodal Officer. The RBI(DESACS) conduct workshops on IBS for thebenefit of Nodal Officers at bank level. Banks inturn conduct regular training/workshops on IBSin their Staff Training Colleges. In order tofacilitate data preparation/compilation by banks/branches, windows based software has beenprovided to them. The banks submit bank levelconsolidated data, in a specified format (textfiles), to the RBI within one month from thereporting date. Data transmission is done inelectronic form only. The HO/PO of bankssubmit the data to the RBI through e-mail/floppy.

The IBS return is not statutory, however, it ismandatory. The return was introduced as perrecommendations of the working group on theBIS system of IBS in India. The working anddevelopment in compilation of the return isoverseen by a standing monitoring group (SMG)

on IBS, which comprises of senior officers ofselect banks and the RBI. The SMG isreconstituted, normally, once in two years.


The IBS data are collected/compiled as per theguidelines/recommendations of the BIS andhence, the data compilation is of internationalstandards. There is a standing monitoring group(SMG) to facilitate implementation of the BISsystem of IBS in India in an effective mannerand to consider necessary changes in the eventof further easing of foreign exchange controls.

Suitable facilities have been provided in thesoftware to generate certain reports to ensurethe coverage and correctness of data. The banksare advised to verify these reports and comparewith the data reported to the RBI under otherreturns. Also, suitable checks are provided inthe software to ensure the quality of data.Further, provision has been made in the softwareto record the reasons for large variations in datawith respect to the data reported in the previousquarters. At RBI level, while processing the datareceived from banks, the correctness/coverageof data are ensured by comparing the IBS datawith similar aggregate level data reported bybanks to the RBI under different set of return.

In order to train/educate bank/branch officialsworkshops/training programs are conductedregularly. Also, banks conduct workshops fortheir officials in their training establishments.

2.1.3 Branch Banking Statistics(Master Office File System)

The Reserve Bank of India collects data/information on different aspects of banks throughperiodical returns/ statements. For processingthese data, it is necessary to keep a uniqueidentity of the source of data. This is achievedthrough allotting suitable code number, namedas Uniform Code Numbers to all the bank offices.Evolving a code numbering system that couldbe uniformly used in all returns to be submittedby bank branches/offices was considered in latesixties by the RBI and put in place initially forcommercial banks in 1972. Similarly, allotmentof Uniform Code Numbers to all the co- operative

54


credit institutions and the state financialcorporations, which participated in the LeadBank Scheme, was attempted in 1982.

2.1.3.1. Measurement needs of the area

Comprehensive and updated list of branches ismaintained by RBI (DESACS) in the Master OfficeFile (MOF) constituting the frame of bankbranches for various Basic Statistical Return(BSR) surveys, other bank related surveys andvarious foreign exchange related returns receivedin DESACS. It may not be out of place tomention here that MOF is the only official andreliable source of branch-banking details ofcommercial banks in India.

Maintenance of up-to-date branch records in theMOF has assumed great significance for thefollowing multi-dimensional utility of branchbanking statistics:

i) Submission of branch-banking data tothe Ministry of Finance for replyingParliament questions.

ii) Submission of branch details to variousCentral and state governmentdepartments in connection with theirpublications, disbursement of pension,online reporting of tax payment data toIncome Tax Department pertaining to OnLine Tax Accounting System (OLTAS), etc.

iii) Submission of details of branches,handling foreign exchange business, withuniform code number to the Office of theCustoms and Central Excise, New Delhiin connection with clearance of exportconsignments by the respective customsauthorities.

iv) Submission of details of branches/officesof commercial banks and summarizeddata thereof to Department of BankingOperations and Development (DBOD) andRural Planning and Credit Department(RPCD) in connection with BranchLicencing Policy.

Besides some of the requirements listed above,other Central Office Departments of RBI otherthan DBOD and RPCD Offices make use of theuniform code numbers and the data compiled

based on MOF. Based on branch details ofcommercial banks available in the MOF, DESACSbrings out regularly two publications viz.,“BRANCH BANKING STATISTICS” (providingsummarized branch banking data on commercialbanks) and “DIRECTORY of COMMERCIAL BANKOFFICES in India” (providing list of branches/offices with locational and other details) in CD-ROM as well as through RBI website. These datain modified form are also published in otherpublications of the Bank.

2.1.3.2. Concepts, Definitions andClassifications

a. Master Office File (MOF)

The uniform codes along with other particularsof each and every branch/office of commercialand co-operative banks and financial institutionshandling foreign exchange and temporary offices,are maintained in the Department of StatisticalAnalysis and Computer Services (DESACS) in theform of Master Office File (MOF) in its computersystem.

b. Uniform Code Number (UCN)

UCN of branches/offices of banks comprises twoparts as Part - I code and Part - II code of 7digits each; two additional digits are assigned toPart – I code of temporary offices (NotAdministratively Independent Offices-NAIO).

Part-I code is defined as follows:

• for branches/offices/NAIOs of commercialbanks and other financial institutions:

first three digits from the left stand for bankcode;

next four digits stand for branch code.

In case of NAIOs last two digits stand forNAIO code.

• for branches/offices/NAIOs of state/districtcentral co-op. banks, state/central landdevelopment banks:

first four digits from the left stand for bankcode;

next three digits stand for branch code;

55

Banking Statistics

last two digits stand for NAIO code. (In caseof NAIOs).

• for branches/offices/NAIOs of other co-op.banks, salary earners’ banks, state financialcorporations and tours, travels, finance &leasing companies:

first five digits from the left stand for bankcode;

next two digits stand for branch code;

last two digits stand for NAIO code.

Part-II code, irrespective of the category of abank, is defined as follows:

first three digits from the left stand for districtcode;next three digits stand for centre code withinthe district;last single digit stands for population rangecode.

Relationship between population range code (lastdigit in the Part – II code) and population groupcode is shown below:

Last digitof Part II

of the Population Population Population

Uniform range Group GroupCode Code

Number(Populaiton

Rangecode)

1 Up to 4999Rural 1

2 5000 to 9999

3 10,000 to 19,999

4 20,000 to 49,999 Semi-Urban 2

5 50,000 to 99,999

6 1,00,000 to 1,99,999

7 2,00,000 to 4,99,999 Urban 3

8 5,00,000 to 9,99,999

9 10 lakhs and above Metropolitan 4

c. Uniform Code, BSR Code and AD CodeNumber

There is no difference between Uniform Code, BSRCode and AD Code Number. They are one andthe same.

d. Proformae - I & II

Detailed information on branches/offices ofbanks are regularly collected in the prescribedproformae, viz., Proforma-I and Proforma-II.Details of new branches/ offices opened inbanked/ unbanked centres such as date ofopening of branch/office, names and addressesof branch/ office, other locational details,population of centre, nature of business activitiespursued and a host of auxiliary information suchas AD category, currency chest details, statusof computerisation, etc., are reported throughProforma-I. The information of relocation/closure/ merger/ conversion of a bank branch/change of branch name/AD category/ change ofany auxiliary information is collected throughProforma-II. Specimen copy of Proformae-I & IIand explanatory note thereon is enclosed atAnnex 2.11.

e. Definition of a Centre with particularreference to location of a bank branch/office

A Centre refers to a revenue unit having definitesurveyed boundary, defined by a localadministration/state government and includessuch places as revenue village/town/city/municipality/municipal corporation/cantonmentboard, outgrowths to a city /municipality/municipal corporation, etc. In decennialpopulation census, same definition of centre isused by the Census Authority. Name of centrereported by banks in the Proforma is checkedagainst records available in the censusdocument.

f. Definition of a Banked Centre

A revenue center as defined above having at leasta branch/office of a commercial or co-operativebank or a temporary office, such as an extensioncounter or a satellite office or an off-site ATM ofa commercial or co-operative bank is called abanked center.

g. Population Group classification of BankedCentres used in RBI

Population groups of banked centres are definedas follows:

56


v) Non-scheduled Commercial Banks (LocalArea Banks)

j. Difference between Satellite Office andExtension Counter

Satellite Offices are normally located in remoteareas and carry out all normal functions of abranch but only on a limited number of days ina week. Whereas, Extension Counters are openin all working days but discharge only limitedfunctions of a branch such as opening of savingsaccount, acceptance of deposit, etc.

2.1.3.3. Sources and Systems

Basic data sources are commercial banks, co-operative banks and non-banking financialcompanies handling foreign exchange business,wherefrom branch banking details are obtainedin Proformae-I & II. Information relating tomerger and reorganization of centers/districts/states are received from gazette notificationsissued by state/central governments. Based onDecennial Census population data of centersreleased by the Office of the Registrar General,Government of India, updation of populationgroup classification of banked centers vis-à-visbank branches is carried out.

In respect of banks other than public sectorbanks, Proformae-I & II are submitted directlyby the head office of the banks, to whom Part-I& II Uniform are advised. In respect of publicsector banks, there is a two-tier arrangement.zonal/circle/local head offices report Proformae-I & II in respect of the branches/offices comingunder their jurisdiction to their head office, whoin turn submit consolidated proformae to us afterallotment of Part-I uniform code to the newlyopened branches/offices, to whom the Part-IIuniform code is advised.

For collection of branch banking data frombanks, recently data entry software (Visual Basic6.0 software has been used as the front endtool and MS Access as the back end) has beendeveloped and forwarded to banks. Master OfficeFile system, wherein all branch/office/NAIOsdetails are maintained, is based on OracleRDBMS system (Visual Basic software has beenused as the front end tool and Oracle 9i as the

i) Rural group includes centres withpopulation less than 10,000.

ii) Semi-urban group includes centres withpopulation 10,000 and above but less than1 lakh.

iii) Urban group includes centers withpopulation 1 lakh and above but less than10 lakh.

iv) Metropolitan group includes centres withpopulation of 10 lakh and above.

h. Population Group classification used byCensus Authority

Population group classification used in the Bankis different from the one used by the CensusAuthority. Population group classification usedby the Census Authority in the 2001 Census isas follows:

The following places are treated as urban:

1. All statutory towns i.e., all places with amunicipality, corporation, cantonment boardor notified town area committee, etc.

2. All other places which satisfy the followingcriteria:

– A minimum population of 5,000;

– At least 75% of the male workingpopulation engaged in non-agriculturalpursuits;

– A density of population of at least 400per sq. km. (1,000 per sq. mile).

All other places (revenue villages) havingdefinite surveyed boundaries were classifiedas rural.

i. Various Commercial Bank Groupscurrently in use

i) Public Sector Banks: (a) SBI ant its 7Associates, (b) 19 Nationalised Banks, (c)Other Public Sector Banks (IDBI Ltd.)

ii) Regional Rural Banks

iii) Foreign Banks

iv) Other Scheduled Commercial Banks(Private Banks): (a) Old Private SectorBanks and (b) New Private Sector Banks

57

Banking Statistics

back end one). In this system, Crystal Reports-11.0 has been used for generating the reports.The main feature of the system is to capturebranch-wise transactional records so that historyof any branch/office/NAIO can be viewed at anypoint of time in the future. Also, in the banklevel software, to cumulate all the records fromthe zonal/circle/local head offices, there is aprovision to import the zonal/circle/local headoffices level files at the HO level and they canbe exported as a single/cumulated format of allrecords, which can be later sent to RBI. Usingthe bank level data entry software, banks havestarted sending soft copy of Proformae- I & II,in magnetic medium/ by using Internet facility.

For branches/offices handling foreign exchangebusiness, Proformae are submitted on an on-going basis. Whereas, banks submit Proformaeon a quarterly basis, in respect of branches/offices not handling foreign exchange business.

2.1.3.4. Ensuring Quality Standards

To ensure receipt of good quality data frombanks, besides earmarking certain importantdata fields in Proformae-I & II as mandatory, alarge number of consistency checks have beenalso incorporated in the data entry software.Workshops are being conducted from time totime to impress upon bank representatives aboutsubmission of good quality data in time.Regulatory authorities in RBI, such asDepartment of Banking Operations andDevelopment, Foreign Exchange Department,Rural Planning and Credit Department, etc.,issue guidelines to banks from time to timeemphasizing the need to submit quality data within stipulated time.

2.1.4. Other Banking Statistics

Besides statistics based on statutory and specialreturns, RBI collects and compiles various otherbanking statistics relating to priority sectors,supervision and other areas of banking.Information based on these subjects are regularlydisseminated in various publications likeStatistical Tables Relating to Banks in India,Report on Trend and Progress of Banking, etc.

Some of the salient features of these statisticsare presented below.

2.1.4.1. Priority Sectors’ Statistics

At a meeting of the National Credit Council heldin July 1968, it was emphasized that commercialbanks should increase their involvement in thefinancing of priority sectors viz., agriculture andsmall- scale industries. The description of thepriority sectors was later formalized in 1972 onthe basis of the report submitted by the InformalStudy Group on Statistics relating to advancesto the priority sectors constituted by the ReserveBank in May 1971. On the basis of this report,the Reserve Bank prescribed a modified returnfor reporting priority sector advances and certainguidelines were issued in this connectionindicating the scope of the items to be includedunder various categories of priority sectors.Although initially there was no specific targetfixed in respect of priority sector lending, inNovember 1974, the banks were advised to raisethe share of these sectors in their aggregateadvances to the level of 33 1/3 per cent byMarch 1979.

At a meeting of the Union Finance Minister withthe Chief Executive Officers of Public Sectorbanks held in March 1980, it was agreed thatbanks should aim at raising the proportion oftheir advances to priority sectors to 40 percentby March 1985. Subsequently, on the basis ofthe recommendations of the Working Group onthe modalities of implementation of PrioritySector Lending and the Twenty Point EconomicProgramme by Banks, all commercial banks wereadvised to achieve the target of priority sectorlending, viz., agriculture, small-scale industries,small road & water transport operators, retailtrade, small business, etc., at 40 percent ofaggregate bank advances by 1985. Sub-targetswere also specified for lending to agriculture andweaker sections within the priority sector. Bankswere advised to ensure that direct financeextended to agriculture (including allied activities)reached a level of at least 15% of total bankcredit by March 1985 and at least 16% by March1987 and 17% of their total credit by March1989 and further raised to 18% by March 1990.In October 1993, banks were advised that with

58


a view to ensuring the focus of the banks onthe direct category of agricultural advances didnot get diluted, that agricultural lending underthe indirect category should not exceed one-fourth of the sub-target of 18 per cent, i.e., 4.5%of Net Bank Credit. At present, within the overallmain lending target of 40 per cent of net bankcredit, the scheduled commercial banks shouldensure that 18% of net bank credit goes toagricultural sector, 10 per cent of net bank creditto the ‘weaker sections’. However, this was notmade applicable to foreign banks operating inthe country in view of the fact that their coveragein rural and semi-urban areas was small. It wasfelt that their involvement in financing of prioritysectors like SSI, small transport operators, retailtrade, etc., could be increased to a much higherlevel than at present. In 1988, foreign banksoperating in India were advised that their prioritysector advances should be progressivelyincreased to the level of 15 per cent of their netoutstanding advances by the end of March 1992.With a view to reducing the disparity betweenthe domestic banks and foreign banks operatingin India in regard to priority sector obligations,foreign banks were advised in April 1993 thattheir minimum requirement for lending topriority sector by foreign banks was raised from15 per cent to 32 per cent of their net bankcredit to be achieved by March 1994. At thesame time, keeping in view that the foreignbanks have no rural branch net work, it wasdecided that with effect from July 01, 1993, thecomposition of priority sector advances in caseof foreign banks would be inclusive of exportcredit provided by them and the enhanced targetof 32% inclusive of export credit. Further, withinoverall target of 32%, the advances to SSI andexport sector should not be less than 10% eachof the net bank credit. However, the sub-targetprescribed for exports was enhanced to 12%subsequently. In the event of failure to attainthe stipulated targets and sub-targets, the foreignbanks are required to make good the shortfallin the achievement of the targets/sub-targets bydepositing for a period of three years, an amountequivalent to the shortfall with the SmallIndustries Development Bank of India (SIDBI) atrate of interest ranging from Bank Rate to BankRate minus 3 percentage points depending on

the percentage of shortfall in achievement ofpriority sector lending target/sub-targets as maybe decided by RBI from time to time. Domesticscheduled commercial banks having shortfall inlending to priority sector/agriculture areallocated amounts for contribution to the RuralInfrastructure Development Fund (RIDF)established with NABARD. Details regardingoperationalisation of the RIDF such as theamounts to be deposited by banks, interest rateson deposits, period of deposits, etc., are decidedevery year after announcement in the UnionBudget about setting up of RIDF. Thecontributions to be made by banks arecommunicated to the banks concernedseparately. Shortfall in lending to priority sector/agriculture is taken into account while makingallocations to banks under RIDF, the amountthat has to be deposited with NABARD at acertain rate of interest.

In order to align bank credit to the changingneeds of the society, the scope and definition ofpriority sector have been fine-tuned over timeby including new items as also by enhancingcredit limit of the constituent sub-sectors. Thecoverage of the priority sectors, the data, whichare published in its various publications by RBI,is described below.

1. Agriculture

1.1 Direct Finance to farmers for agriculturalpurposes viz.,

1.1.1. Short- term loans for raisingcrops, i.e., for crop loans. In addition,advances upto Rs.10 lakh to farmersagainst pledge/hypothecation ofagricultural produce (including warehousereceipts) for a period not exceeding 12months, where the farmers were given croploans for raising the produce, provided theborrowers draw credit from one bank

1.1.2 Medium and long term loansprovided directly to farmers for financingproduction and development needs,

(i) Purchase of agricultural implementsand machinery

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Banking Statistics

(a) Purchase of agricultural implements(iron ploughs, harrows, hose, landlevelers, bundfarmers, hand tools,sprayers, dusters, hay-press,sugarcane crushers, threshermachines, etc.)

(b) Purchase of farm machinery (viz.,tractors, trailers, power tillers,tractor accessories, etc.),

(c) purchase of trucks, jeeps, pick-upvans, bullock carts and othertransport equipments to assist thetransport of agricultural inputs andfarm products,

(d) transport of agricultural inputs andfarm products,

(e) purchase of plough animals, etc.

(ii) Development of irrigation potentialthrough

(a) construction of shallow and deeptube wells, tanks, etc., and purchaseof drilling units,

(b) constructing, deepening clearing ofsurface wells, boring of wells,electrification of wells, purchase ofoil engines and installation of electricmotor and pumps,

(c) purchase and installation of turbinepumps, construction of fieldchannels (open as well asunderground), etc.,

(d) construction of lift irrigation project,

(e) installation of sprinkler irrigationsystem,

(f) purchase of generator sets forenergisation of pumpsets used foragricultural purposes,

(iii) Reclamation and land developmentschemes - Bunding of farm lands,terracing, conversion of dry paddy landsinto wet irrigable paddy lands, wastelanddevelopment, development of farmdrainage, reclamation of soil lands andprevention of salinisation, reclamation ofravine lands, purchase of bulldozers, etc.

(iv) Construction of farm buildings andstructures, etc. - Bullock sheds,implement sheds, tractor and trucksheds, farm stores,

(v) Construction and running of storagefacilities - Construction and running ofwarehouses, godowns, silos and loansgranted to farmer for establishing coldstorages used for storing own produce,

(vi) Payment of irrigation charges, etc. -Charges for hired water from wells andtube wells, canal water charges,maintenance and upkeep of oil enginesand electric moors, payment of labourcharges, electricity charges, marketingcharges, service charges to CustomsService Units, payment of developmentcess, etc.

(vii) Other types of direct finance tofarmers –

a. Short-term loans

i. To traditional/non-traditionalplantations and horticulture

ii. For allied activities such asdairy, fishery, piggery, poultry,bee-keeping, etc.

b. Medium and long term loans

i. Development of loans to allplantations, horticulture,forestry and wasteland

ii. Development of loans for alliedactivities,

iii. Development of dairying andanimal husbandry in all itsaspects,

iv. Development of fisheries in allits aspects from fish catchingto stage of export, financing ofequipment necessary for deepsea fishing, rehabilitation oftanks (fresh water fishing), fishbreeding, etc.

v. Development of poultry piggery,etc. in all its aspects includingerection of poultry houses, pighouses, bee-keeping, etc.

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vi. Development and maintenanceof stud farms, sericultureincluding grainages etc.However, breeding of racehorses cannot be classifiedhere,

vii. Bio-gas plants,

viii. Financing of small andmarginal farmers for purchaseof land for agriculturalpurposes,

ix. Financing setting up ofAgriclinics and AgribusinessCentres by agriculturegraduates,

x. Investment by banks insecuritised assets whichrepresent direct advance toagriculture.

1.2: Indirect finance to agriculture

1.2.1 (i) Credit for financing thedistribution of fertilizers,pesticides, seeds, etc.,

(ii) loans up to Rs.40 lakh grantedfor financing distribution ofinputs for the allied activitiessuch as cattle feed, poultryfeed, etc.

1.2.2 (i) loans to Electricity Boards forreimbursing the expenditurealready incurred by them forproviding low tensionconnection from step-downpoint to individual farmers forenergizing their wells, loans topower distribution corpora-tions/companies emerging outof bifurcation/restructuring ofSEBs may also be classified asindirect finance to agricultureand (ii) loans to SEBs forSystems Improvement Schemeunder Special Project Agri-culture (SI-SPA),

1.2.3 Loans to farmers through PACS, FSSand LAMPS,

1.2.4 Deposits held by the banks in RuralInfrastructure Development Fund(RIDF) maintained with NABARD

1.2.5 Subscriptions to bonds issued byRural Electrification Corporation(REC) exclusively for financing pumpset energisation programme in ruraland semi-urban areas and also forfinancing System ImprovementProgramme (SI-SPA). However, theinvestments that may be made bybanks on or after April 1, 2005 inthe bonds issued by REC shall notbe eligible for classification underpriority sector lending and suchinvestments which have alreadybeen made by banks upto March 31,2005, would cease to be eligible forclassification under priority sectorlending with effect from April 1,2006.

1.2.6 Subscriptions to bonds issued byNABARD with the objective offinancing exclusively agriculture/allied activities. However, theinvestments made by banks in suchbonds issued by NABARD, shall notbe eligible for classification underpriority sector lending with effectfrom April 1, 2007.

1.2.7 Other types of indirect finance suchas (i) finance for hire-purchaseschemes for distribution ofagricultural machinery andimplements, (ii) loans forconstructions and running of storagefacilities (warehouse, market yards,godowns and silos) including coldstorage units designed to storeagriculture produce/products,irrespective of their location, (iii)advances to Customs Service Unitsmanaged by individuals, institutionsor organizations who maintain a fleetof tractors, bulldozers, well-boringequipment, threshers, combines etcand undertake work from farmers oncontact basis, (iv) loans toindividuals, institutions ororganizations who undertake

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Banking Statistics

spraying operations, (v) advances toState-sponsored Corporations foronward lending to weaker sections,(vi) loans to Non Banking FinancialCompanies(NBFCs) for on-lending toagriculture, investment by banks insecuritised assets which representdirect advances to agriculture, etc.

2. Small Scale Industries

2.1. Small and Ancillary Industries

Small-scale industrial units are those engagedin the manufacturing, processing or preservationof goods and whose investment in plant andmachinery (original cost) does not exceed Rs.1crore. These would, inter alia, include unitsengaged in mining or quarrying, servicing andrepairing of machinery. In the case of ancillaryunits, the investment in plant and machinery(original cost) should not exceed Rs.1 crore tobe classified under small-scale industry.

The investment limit of Rs.1 crore forclassification as SSI has been enhanced to Rs.5crore in respect of certain specified items underhosiery, hand tools, drugs & pharmaceuticalsand stationery items by the Government of India.

In order to ensure that credit is available to allsegments of the SSI sector, banks should ensurethat

(1) 40 per cent of the total credit to small scaleindustry goes to the cottage industries,khadi & village industries, artisans and tinyindustries with investment in plant andmachinery up to Rs.5 lakh

(2) 20 per cent of the total credit to small scaleindustry goes to SSI units with investmentin plant and machinery between Rs.5 lakhand Rs.25 lakh; and

(3) The remaining 40 per cent goes to other SSIunits with investment exceeding Rs.25 lakh

2.2 Tiny Enterprises

The status of ‘Tiny Enterprises’ may be given toall small scale units whose investment in plantand machinery is up to Rs.25 lakh, irrespectiveof the location of the unit.

2.3. Small Scale Service & BusinessEnterprises (SSSBEs)

Industry related service and business enterpriseswith investment upto Rs.10 lakh in fixed assets,excluding land and building will be given thebenefits of small scale sector. For computationof value of fixed assets, the original price paidby the original owner will be consideredirrespective of the price paid by subsequentowners.

2.4 Investment made by banks in securitisedassets representing direct lending to the SSIsector would be treated as their direct lendingto SSI sector under priority sector, provided itsatisfies the following conditions:

(1) The pooled assets represent direct loans toSSI sector which are reckoned underpriority sector ; and

(2) The securitized loans are originated bybanks/financial institutions

2.5 Indirect finance in the small-scale sectorwill include credit to :

(i) Agencies involved in assisting thedecentralized sector in the supply ofinputs and marketing of outputs ofartisans, village and cottageindustries,

(ii) Government sponsored Corporations/organizations providing funds to theweaker sections in the priority sector,

(iii) Advances to handloom co-operatives,

(iv) Term finance/loans in the form oflines of credit made available to StateIndustrial Development Corporation/State Financial Corporations forfinancing SSIs,

(v) Credit provided by banks to KVICunder the scheme for provision ofcredit to KVIC by consortium of banksfor on lending to viable Khadi andVillage Industrial Units, etc.

2.6 Industrial Estates - Loans for setting upindustrial estates.

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3. Small Road & Water TransportOperators (SRWTO)

Advances to small road and water transportoperators owning a fleet of vehicles not exceedingten vehicles, including the one proposed to befinanced.

Advances to NBFCs for on-lending to truckoperators and SRWTOs other than truck operatorssatisfying the eligibility criteria. Also, portfoliopurchases (purchases of hire purchasereceivables) from NBFCs made after 31 July 1998would also qualify for inclusion under prioritysector lending, provided the portfolio purchasesrelate to SRWTOs satisfying priority sector norms.

4. Retail Trade

Advances granted to (a) retail traders dealing inessential commodities (fair price shops) andconsumer co-operative stores, and (b) privateretail traders with credit limits not exceedingRs.10 lakh (Retail traders in fertilizers will formpart of indirect finance for agriculture and thoseto retail traders of mineral oils under smallbusiness).

5. Small Business

Small business would include individuals andfirms managing a business enterprise establishedmainly for the purpose of providing any serviceother than professional services whose originalcost price of the equipment used for the businessdoes not exceed Rs.20 lakh. Banks are free tofix individual limits for working capital dependingupon the requirements of different activities.

Advances for acquisition, construction,renovation of house boats and other touristaccommodation will be included here.Distribution of mineral oils shall be includedunder ‘small business’. Advances to judicialstamp vendors and lottery ticket agents may alsobe classified under this category.

6. Professional & Self-employed Persons

Included under this head are:

a. Loans to professional and self-employedpersons include loans for the purpose of

purchasing equipment, repairing orrenovating existing equipment and/oracquiring and repairing business premisesor for purchasing tools and/or for workingcapital requirements to medical practitionersincluding dentists, chartered accountants,cost accountants, practicing companysecretary, lawyers or solicitors, engineers,architects, surveyors, constructioncontractors or management consultants orto a person trained in any other art or craftwho holds either a degree or diploma fromany institutions established, aided, orrecognized by Government or to a personwho is considered by the bank astechnically qualified or skilled in the fieldin which he is employed.

b. Advances to accredited journalists andcameramen who are freelancers, i.e., notemployed by a particular newspaper/magazine for acquisition of equipment bysuch borrowers for their professional use.

c. Credit for the purpose of purchasingequipment, acquisition of premises (strictlyfor business) and tools to practicingcompany secretaries who are not in theregular employment of any employer.

d. Financial assistance for running ‘HealthCentre’ by an individual who is not a doctorbut has received some formal training aboutthe use of various instruments of physicalexercises.

e. Advances for setting up beauty parlourswhere the borrower holds qualification inthe particular profession and undertakes theactivity as the sole means of living/earninghis/her livelihood.

f. Only such professional and self-employedpersons whose borrowings (limits) do notexceed Rs.10 lakh of which not more thanRs.2 lakh should be for working capitalrequirements, should be covered under thiscategory. However, in the case ofprofessionally qualified medicalpractitioners, setting up of practice in semi-urban and rural areas, the borrowing limitsshould not exceed Rs.15 lakh with a sub-ceiling of Rs.3 lakh for working capital

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Banking Statistics

requirements. Advances granted forpurchase of one motor vehicle toprofessional and self-employed personsother than qualified medical practitionerswill not be included under priority sector.

g. Advances granted by banks to professionaland self-employed persons for acquiringpersonal computers for their professionaluse, may be classified in this category,provided the ceiling of total borrowings ofRs.10 lakh of which working capital shouldnot be more than Rs.2 lakh per borrower,is complied with in each case for the entirecredit inclusive of credit provided forpurchase of personal computer. However,home computers should not be treated onpar with personal computers and excludedfrom priority sector lending.

7. State sponsored organization forscheduled castes/scheduled tribes

Advances sanctioned to State SponsoredOrganisations for Scheduled Castes/ScheduledTribes for the specific purpose of purchase andsupply of inputs to and/or the marketing of theoutputs of the beneficiaries of theseorganizations.

8. Education

Educational loans should include only loans andadvances granted to individuals for educationalpurposes up to Rs.7.5 lakh for studies in Indiaand Rs.15 lakh for studies abroad and not thosegranted to institutions and will include alladvances granted by banks under specialschemes, if any introduced for the purpose.

9. Housing

Direct Finance

(i) Loans upto Rs.15 lakh in rural/semi-urbanareas, urban and metropolitan areas forconstruction of houses by individuals, withthe approval of the banks’ boards, excludingloans granted by banks to their ownemployees.

(ii) Loans given for repairs to the damagedhouses of individuals upto Rs.1 lakh in

rural and semi-urban areas and Rs.2 lakhin urban areas.

(iii) Loans granted by banks upto Rs.5 lakh toindividuals desirous of acquiring orconstructing new dwelling units and uptoRs.50,000/- for upgradation or majorrepairs to the existing units in rural areasunder Special Rural Housing Scheme ofNHB

(iv) Investment by banks in the mortgagedbacked securities, provided it satisfies thefollowing conditions

(a) The pooled assets are in respect ofdirect housing loans which satisfy thedefinition for inclusion under thepriority sector

(b) The securitised loans are originated bythe housing finance companies/banks;

Indirect Finance

(i) Assistance given to any governmentalagency for construction of houses or forslum clearance and rehabilitation of slumdwellers, subject to a ceiling of Rs.5 lakhof loan amount per housing unit,

(ii) Assistance given to a non-governmentalagency approved by the NHB for thepurpose of refinance for reconstruction ofhouses or for slum clearance andrehabilitation of slum dwellers, subject to aceiling of loan component of Rs.5 lakh perhousing unit,

(iii) All the investment in bonds issued by NHB/HUDCO exclusively for financing of housing,irrespective of the loan size per dwellingunit, will be reckoned for inclusion.However, the investments that may be madeby banks on or after April 1, 2005 in thebonds issued by NHB/HUDCO shall not beeligible for classification under prioritysector lending and such investments whichhave already been made/to be made bybanks upto March 31, 2005 would ceaseto be eligible for classification underpriority sector lending with effect from April1, 2006.

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10. Consumption Loans

Pure consumption loans granted to the weakersections of the community under theConsumption Credit Scheme should be includedin this item. These include:

i. Loans to NGOs/Self-Help Groups (SHGs)/Micro Credit,

ii. Loans provided by banks to NGOs/SHGsfor on-lending to SHG/members ofSHGs/discrete individuals or smallgroups which are in the process offorming into SHGs will be reckoned aspriority sector lending,

iii. Lending to SHGs is to be included as apart of bank’s lending to weaker sections,

iv. Micro credit provided by banks eitherdirectly or through any intermediaryshould be included under priority sector.

11. Food and Agro-based Processing Sector

The following items within the food and agro-based processing sector would be eligible forclassification as priority sector lending by banks:(i) Fruit and vegetable processing industry, (ii)Food grain milling industry, (iii) Dairy products,(iv) Processing of poultry and eggs, meatproducts, (v) Fish processing, (vi) Bread, oilseeds,meals (edible), breakfast foods, biscuits,confectionery (including cocoa processing andchocolate), malt extract, protein isolate, highprotein food, weaning food and extruded/otherready to eat food products, (vii) Aerated water/soft drinks and other processed foods, (viii)Special Packaging for food processing industriesand (ix) Technical assistance and advice to foodprocessing industry.

With regard to the size of the units within thissector, it is clarified that food and agro-basedprocessing units of small and medium size withinvestment in plant and machinery up to Rs.5crore would be included under priority sectorlending. While loans to units satisfying SSIdefinition may be shown under advances to SSI,loans to other units should be shown separatelyin the half-yearly statements on priority sectorlending.

12. Software Industry

Loans to software industry with credit limit upto Rs.1 crore from the banking industry to beincluded under this item.

13. Venture Capital

Investment in Venture Capital will be eligible forinclusion in priority sector, subject to thecondition that the venture capital funds/companies are registered with SEBI. However,fresh investments that may be made by bankson or after July 1, 2005 shall not be eligible forclassification under priority sector lending andthe investments which have already been madeby banks upto June 30, 2005 shall not beeligible for classification under priority sectorlending with effect from April 1, 2006.

14. Leasing and Hire purchase

Para-banking activities such as leasing and hirepurchase financing undertaken departmentallyby banks will be classified as priority sectoradvances, provided the ultimate beneficiarysatisfies the criteria laid down by RBI for treatingsuch advances as advances to priority sector

15. Loans to urban poor indebted to non-institutional lenders

Loans to distressed urban poor to prepay theirdebt to non-institutional lenders againstappropriate collateral or group security, subjectto the guidelines to be approved by their Boardsof Directors, would be eligible for classificationunder priority sector. Urban poor for thispurpose may include those families in the urbanareas who are below the poverty line.

16. Weaker Sections

In order to ensure that more under-privilegedsections in the priority sector are given properattention in the matter of allocation of credit, itshould be ensured that the advances to weakersections reach a level of 25 per cent of prioritysector advances or 10 per cent of net bankcredit. The weaker sections under priority sectorshall include the following:

(a) Small and marginal farmers with landholding of 5 acres and less and landlesslabours, tenant farmers and share croppers

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Banking Statistics

(b) Artisans, village and cottage industrieswhere individual credit limits do not exceedRs.50,000/-,

(c) Beneficiaries of Swarnjayanthi GramSwarojgar Yojana (SGSY),

(d) Scheduled Castes and Scheduled Tribes,

(e) Beneficiaries of Differential Rate of Interest(DRI) Scheme,

(f) Beneficiaries under Swarna Jayanti ShahariRojgar Yojana (SJSRY),

(g) Beneficiaries under the Scheme for Liberationand Rehabilitation of Scavangers (SLRS),

(h) Advances to Self Help Groups,

(i) Loans to distressed urban poor to prepaytheir debt to non-institutional lendersagainst appropriate collateral or groupsecurity, subject to the guidelines to beapproved by their Boards of Directors

17. Differential Rate of Interest Scheme

The scheme was introduced in 1972 and is beingimplemented by all Indian Scheduled CommercialBanks. The banks are required to lend under thescheme, at least 1% of their aggregate advances asat the end of the previous year. 2/3rd of the totalDRI advances must be routed through the banks’rural and semi urban branches.

i. Objective: To provide bank finance at aconcessional rate of interest of 4 % p.ato the weaker sections of the communityfor engaging in productive and gainfulactivities so that they could improve theireconomic conditions.

ii. Area of operations: The scheme is beingimplemented throughout the country.

iii. Target group/Eligibility criteria: Incomecriteria: The income ceiling for eligibilityis annual income of Rs. 7200/- per familyin urban or semi urban areas andRs. 6400/- per family in rural areas.

iv. Land holding criteria: Size of land holdingmust not exceed one acre of irrigated landand 2.5 acres of unirrigated land. Theland holding criteria is not applicable toSC/STs.

The important categories of borrowersunder the scheme are SC/STs and othersengaged on a very modest scale, inagriculture and / or allied agriculturalactivities, people who themselves collector do elementary processing of forestproducts, people physically engaged on amodest scale in the fields of cottage andrural industries and vocation, indigentstudents of merit etc.

v. Loan amount: The maximum assistanceper beneficiary has been fixed at Rs.6500/- for productive purposes. Inaddition to this, physically handicappedpersons can avail of assistance to theextent of Rs. 5000/- (maximum) perbeneficiary for acquiring aids, appliances,equipment, provided they are eligible forassistance under the scheme. Similarly,members of SC/ST s satisfying theincome criteria of the scheme can alsoavail of housing loan up to Rs. 5000/-per beneficiary over and above the loanof Rs. 6500/- available under the scheme.

vi. Margin money: No margin money hasbeen prescribed under the scheme.

vii. Capital subsidy/Interest: No capitalsubsidy is available. Rate of interest tobe charged on loans is 4 % p.a. Intereston current due is not to be compounded.

viii. Security: No collateral security/ thirdparty guarantee is required. Assetscreated out of the loan amount wouldonly be hypothecated to the banks.

ix. Repayment: Not exceeding five yearsincluding grace period of two years.

x. Reservation/Preference: The banks arerequired to ensure that at least 40% oftheir DRI advances flow to SC/STs.

2.1.4.2. Supervisory Statistics

As supervisor of the banking system, RBI collectsvoluminous data on several indicators ofperformance, health, soundness, management,etc., from the banks. These data are being calledin exercise of powers vested in RBI under Section27(2) of Banking Regulation Act, 1949. Most ofthese information are confidential in nature.

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However, RBI is disseminating some informationin the form of tables based on off-site supervisorydata reporting system in its annual publications,viz., Annual Report, Report on Trend and Progressof Banking in India and Statistical Tables Relatingto Banks in India. The source and coverage ofdata are generally provided in the footnotes to therespective tables. The supervisory returns arereceived from banks as encrypted emailattachments. Concepts, definitions and otherinformation pertaining to data provided in thetables (Annex 2.12) are given below:

2.1.4.2.1. Non-performing assets

Beginning April 1, 1992, banks in India switchedover to a system of recognition of income,classification of assets and provisioning for baddebts on a prudential basis which is objective,based on record of recovery and ensuringuniform and consistent application of norms.Prior to this, banks were classifying the advancesunder a Health-code system. Under the existingincome recognition, asset classification andprovisioning norms, banks assets are classifiedunder the following categories:

1. Standard Assets

2. Sub-standard assets

3. Doubtful assets and

4. Loss assets

Non-performing assets pertain to assets, otherthan standard assets. An asset, including aleased asset, becomes non-performing when itceases to generate income for the bank.

A non-performing asset (NPA) is a loan or anadvance where;

(i) interest and / or installment of principalremain overdue for a period of more than90 days in respect of a term loan,

(ii) the account remains ‘out of order’ in respectof an Overdraft / Cash Credit (OD / CC),

(iii) the bill remains overdue for a period ofmore than 90 days in the case of billspurchased and discounted,

(iv) a loan granted for short duration cropswill be treated as NPA, if the installment

of principal or interest thereon remainsoverdue for two crop seasons.

(v) a loan granted for long duration cropswill be treated as NPA, if the installmentof principal or interest thereon remainsoverdue for one crop season.

Banks are advised to classify an account as NPAonly if the interest charged during any quarteris not serviced fully within 90 days from theend of the quarter. For further information, onemay refer to Master Circular DBOD. No.BP.BC.11/21.04.048 /2005-06 dated July 1, 2005 onPrudential Norms on Income Recognition, AssetClassification and Provisioning pertaining toAdvances, available in RBI website(www.rbi.org.in). Loan assets of banks arebroadly classified as performing (standard) andnon-performing assets. Non-performing assetsare classified as sub-standard, doubtful and lossassets based on the period for which the assethas remained non-performing and therealisability of the dues.

2.1.4.2.1.1. Sub-standard Assets

A sub-standard asset is one, which is classifiedas NPA for a period not exceeding two years.With effect from 31 March 2001, a sub-standardasset is one, which remained NPA for a periodless than or equal to 18 months. In such cases,the current net worth of the borrower /guarantor or the current market value of thesecurity charged is not enough to ensurerecovery of the dues to the banks in full. In otherwords, such an asset will have well defined creditweaknesses that jeopardise the liquidation of thedebt and are characterised by the distinctpossibility that the banks will sustain some loss,if deficiencies are not corrected. With effect from31 March 2005, a sub-standard asset is one,which has remained NPA for a period less thanor equal to 12 months.

2.1.4.2.1.2. Doubtful Assets

A doubtful asset is one, which remained NPAfor a period exceeding two years. With effect from31 March 2001, an asset is to be classified asdoubtful, if it has remained NPA for a periodexceeding 18 months. A loan classified asdoubtful has all the weaknesses inherent in

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Banking Statistics

assets that were classified as sub-standard, withthe added characteristic that the weaknessesmake collection or liquidation in full, - on thebasis of currently known facts, conditions andvalues - highly questionable and improbable.With effect from March 31, 2005, an asset wouldbe classified as doubtful if it remained in thesub-standard category for 12 months.

2.1.4.2.1.3. Loss Assets

A loss asset is one where loss has been identifiedby the bank or internal or external auditors orthe RBI inspection but the amount has not beenwritten off wholly. In other words, such an assetis considered uncollectible and of such littlevalue that its continuance as a bankable assetis not warranted although there may be somesalvage or recovery value.

2.1.4.2.2. Provisioning Norms

RBI introduced the system of Asset classificationand provisioning in line with internationalpractice for the first time in 1993. The presentnorms, which are applicable as on March 2005,are presented below:

Asset Provisioning

1. Substandard

(a) Secured 10% of outstanding dues

(b) Unsecured 20% of outstanding dues

2. Doubtful

(a) Doubtful I 20% of realisable value(first 12 months for security +100% ofin doubtful the shortfall of security.category)

(b) Doubtful II 30% of realisable value(further 24 months for security +100% ofin doubtful the shortfall of securitycategory)

(c) Doubtful III 100% provisioning(over 48 months

in doubtful

category)

3. Loss Assets 100% provisioning

2.1.4.2.3. Investment Fluctuation Reserve

In terms of the RBI instructions June 12, 1997,the excess provision towards depreciation oninvestments should be transferred to CapitalReserve Account by way of appropriation in theProfit and Loss Account. It was decided that theexcess provision towards depreciation oninvestments should be appropriated to“Investment Fluctuation Reserve Account”instead of Capital Reserve Account and shouldbe shown as a separate item in Schedule 2 -“Reserves and Surpluses” under the head“Revenue and other Reserves” and will be eligiblefor inclusion in Tier II capital. The existingamount of excess provision towards depreciationon investments held under Capital ReserveAccount should stand transferred to “InvestmentFluctuation Reserve Account”. The amount heldin “Investment Fluctuation Reserve Account “could be utilised to meet, in future, thedepreciation requirement on investment insecurities. In terms of subsequent instructiondated March 30, 1999, banks were advised toappropriate the excess provision towardsdepreciation on investments to InvestmentFluctuation Reserve Account (IFR) instead ofCapital Reserve Account. Banks were permittedto utilise the amount held in IFR to meet, infuture, the depreciation requirement oninvestment in securities. In the context of thesubstantial decline in the yield on securities, theposition was reviewed in consultation with majorcommercial banks as under:

i. Banks should transfer maximum amountof the gains realised on sale of investmentin securities to the IFR.

ii. The objective should be to achieve IFR ofa minimum of 5 per cent of the portfolio,by transferring the gains realised on saleof investment, within a period of 5 years.Banks are, however, free to build uphigher percentage of IFR of upto 10 percent of the portfolio depending on the sizeand composition of their portfolio, withthe concurrence of their Board ofDirectors.

iii. Banks should ensure that the unrealisedgains on valuation of the investment

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portfolio are not taken to the incomeaccount or to the IFR.

iv. In modification of the earlier instructionsdated October 16, 2000, individual scripsheld under the ‘Available for Sale’category should be marked to market atleast at quarterly intervals.

v. The Investment Fluctuation Reserve,consisting of realised gains from sale ofinvestments, would be eligible forinclusion in Tier 2 capital as hitherto.

vi. Banks were advised to assess the impactof changes in interest rates on theirinvestment portfolio. In addition, bankswere advised therein to fix a definitetimeframe for moving over to VaR andDuration methods for measurement ofinterest rate risk and initiate appropriatesteps in this direction.

vii. Banks were also permitted to transferbalances from IFR to Profit and LossAccount to meet the depreciationrequirement on investment as a ‘belowthe line’ item would continue, as hitherto.

Further, with a view to ensuring smoothtransition to Basel II norms banks were advisedon June 24, 2004 to maintain capital charge formarket risk in a phased manner over a two yearperiod, as under:

i) In respect of securities included in theheld for trading (HFT) * category, opengold position limit, open foreign exchangeposition limit, trading positions inderivatives and derivatives entered intofor hedging trading book exposures byMarch 31, 2005, and

ii) In respect of securities included in theavailable for sale (AFS) * category byMarch 31, 2006.

With a view to encourage banks for earlycompliance with the guidelines for maintenance ofcapital charge for market risks, it has beendecided that banks which have maintained capitalof at least 9 per cent of the risk weighted assetsfor both credit risk and market risks for both HFT(items as indicated at (i) above) and AFS categorymay treat the balance in excess of 5 per cent ofsecurities included under HFT* and AFS*categories, in the IFR, as Tier I capital. Bankssatisfying the above criteria may transfer theamount in excess of the said 5 per cent in the IFRto Statutory Reserve. This transfer shall be madeas a ‘below the line’ item in the Profit and LossAppropriation Account. In another advice datedOctober 10, 2005, it was further decided thatbanks which have maintained capital of at least 9per cent of the risk weighted assets for both creditrisk and market risks for both HFT (items asindicated at (i) above) and AFS category as onMarch 31, 2006, would be permitted to treat theentire balance in the IFR as Tier I capital. For thispurpose, banks may transfer the balance in theInvestment Fluctuation Reserve ‘below the line’ inthe Profit and Loss Appropriation Account toStatutory Reserve, General Reserve or balance ofProfit & Loss Account.

In the event, provisions created on account ofdepreciation in the AFS or HFT categories arefound to be in excess of the required amount inany year, the excess should be credited to theProfit & Loss account and an equivalent amount(net of taxes, if any and net of transfer toStatutory Reserves as applicable to such excess

• Trading – Debt and equity securities that are boughtand sold principally for the purpose of selling them inthe near term are classified as trading securities andare reported in the financial statements at fair value.Changes in the fair value from period to period arereported as a component of net income.

• Available-for-sale – Debt and equity securities notclassified either as held-to-maturity or trading areconsidered available-for-sale and are reported at fairvalue. Changes in the fair value from period to periodare not reported as a component of net income but arecharged or credited directly to equity.

* Accounting standards require a Company to classify itsinvestment in debt (bonds) and equity (stocks) securitiesinto one of three categories when they are purchased:(1) held-to-maturity (HTM), (2) trading (HFT), or (3)available-for-sale (AFS). This classification is based onthe Company’s intended use of that security and theclassification dictates the accounting treatment.

Held to maturity – Debt securities that the company hasthe positive intent and ability to hold to maturity areclassified as held-to-maturity securities and are reportedat amortized cost. The impact of temporary fluctuationsin fair value of the debt securities is not reflected in theCompany’s financial statements. Since equity securitiesdo not have maturity date, they cannot be classified asheld-to-maturity.

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Banking Statistics

provision) should be appropriated to anInvestment Reserve Account in Schedule 2 -“Reserves & Surplus” under the head “Revenueand other Reserves” and would be eligible forinclusion under Tier II within the overall ceiling of1.25 per cent of total Risk Weighted Assetsprescribed for General Provisions / Loss Reserves.

2.1.4.2.4. Capital adequacy ratio

The Committee on Banking Regulations andSupervisory Practices (Basle Committee) had, inJuly 1988, released the agreed framework oninternational convergence of capital measure andcapital standards. The Committee adoptedweighted risk assets approach which assignsweights to both on and off Balance Sheetexposures of a bank according to their perceivedrisk, as the method of measuring capitaladequacy and set the minimum standard at 8per cent (of risk weighted assets) to be achievedby the end of 1992 (7.25 per cent by end - 1990).The Committee was keen that this accord oncapital adequacy measurement (herein afterreferred as the Basel I standards) should becomethe basis for a worldwide standard.

In India, various groups of banks were subjectedto different minimum capital requirements asprescribed in the Statutes under which they havebeen set up and operate. The foreign banksoperating in India were prescribed to hold foreignfunds deployed in Indian business equivalent to3.5 per cent of their deposits as at the end ofeach year. Further, there are prescriptionsregarding the maintenance of statutory reserves.In the context of the varying minimum capitalrequirements and taking into account theapproach of Basle Committee, it was decided tointroduce uniform prescriptions for capitaladequacy in April 1992.

The Basel I capital adequacy framework wasimplemented in phases with banks required toadhere to the following time table:

Minimum capital requirement

Foreign banks 8% of RWA by March 31,operating in India 1993

Indian banks with 8% of RWA by March 31,foreign branches 1993

All other banks 4% of RWA by March 31, 1993

8% of RWA by March 31, 1996

With effect from March 31, 2000, all scheduledcommercial banks are required to maintain aminimum CRAR of 9%.

2.1.4.2.5. Some Important Definitions

Capital funds: The Basle Committee has definedcapital in two tiers - Tier I and Tier II. Tier Icapital, otherwise known as core capital, providesthe most permanent and readily availablesupport to a bank against unexpected losses.Tier II capital contains elements that are lesspermanent in nature or are less readily available.Elements of Tier I capital and Tier II capital differwith respect to Indian banks and foreign banksoperating in India.

Risk adjusted assets and off-Balance Sheet items:Risk adjusted assets would mean weightedaggregate of funded and non-funded items. It isdefined as Balance Sheet assets and conversionfactors to off-Balance Sheet items, expressed asa weighted percentage of individual credit risk*.The value of each asset/item shall be multipliedby the relevant weights to produce risk adjustedvalues of assets and of off-Balance Sheet items.The aggregate will be taken into account forreckoning the minimum capital ratio.

* Credit risk is risk due to uncertainty in counterparty’sability to meet its obligations. Because there are manytypes of counterparties from individuals to sovereigngovernments and many different types of obligations fromauto loans to derivatives transactions, credit risk takesmany forms. Institutions manage it in different ways. Inassessing credit risk from a single counterparty, aninstitution must consider three issues: Default probabilitywhich is the likelihood that the counterparty will defaulton its obligation either over the life of the obligation orover some specified horizon, such as a year, Creditexposure which is in the event of a default, how largewill the outstanding obligation be when the default occursand the Recovery rate which is in the event of a default,what fraction of the exposure may be recovered throughbankruptcy proceedings or some other form of settlement.

Every risk comprises two elements: exposure anduncertainty. For credit risk, credit exposure representsthe former, and credit quality represents the latter.

Prior to extending credit, a bank or other lender willobtain information about the party requesting a loan. Inthe case of a bank issuing credit cards, this might includethe party’s annual income, existing debts, whether theyrent or own a home, etc. A standard formula is appliedto the information to produce a number, which is calleda credit score. Based upon the credit score, the lendinginstitution will decide whether or not to extend credit.

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Capital requirement for market risks*: The BaselCommittee on Banking Supervision (BCBS) hadissued the ‘Amendment to the Capital Accord toincorporate market risks’ containingcomprehensive guidelines to provide explicitcapital charge for market risks. Market risk isdefined as the risk of losses in on-balance sheetand off-balance sheet positions arising frommovements in market prices. The market riskpositions subject to capital charge requirement are:

* The risks pertaining to interest rate relatedinstruments and equities in the tradingbook; and

* Foreign exchange risk (including openposition in precious metals) throughout thebank (both banking and trading books).

As an initial step towards prescribing capitalrequirement for market risks, banks were advisedto:

i) assign an additional risk weight of 2.5per cent on the entire investmentportfolio;

ii) assign a risk weight of 100 per cent onthe open position limits on foreignexchange and gold; and

iii) build up Investment Fluctuation Reserveup to a minimum of five per cent of theinvestments held in Held for Trading andAvailable for Sale categories in theinvestment portfolio.

The interim measures adopted in India representa broad brush and simplistic approach. Besides,over a period of time, banks’ ability to identifyand measure market risk has improved. Keepingin view the ability of banks to identify andmeasure market risk, it was decided to assignexplicit capital charge for market risks. Banksare required to maintain capital charge for

market risks in a phased manner over a twoyear period, as detailed below:

(a) Banks were required to maintain capital formarket risks on securities included in theHeld for Trading category, open goldposition, open forex position, tradingpositions in derivatives and derivativesentered into for hedging trading bookexposures by March 31, 2005.Consequently, the additional risk weight of2.5% towards market risk on the investmentincluded under Held for Trading categoryis not required.

(b) Banks should maintain capital for marketrisks on securities included in the Availablefor Sale category also by March 31, 2006.Consequently, the additional risk weight of2.5% towards market risks maintained atpresent on the investment included underAvailable for Sale and Held to Maturitycategories would not be required with effectfrom the above date or from an earlier datefrom which bank provides capital for marketrisk for securities held in the Available forSale category.

Return on Total assets: Profit after Tax ÷ TotalAssets × 100

Return on Equity: Profit after Tax ÷ Total Capitaland Reserves × 100

Cost / Income ratio: Operating expenses ÷ (Totalincome – Interest expenses) × 100

Operating expenses: Total expenses – interestexpenses

Net interest income: Interest income net ofinterest tax – interest expenses

Net profit: Profit after tax.

Bank groups: Banks are be broadly categorizedinto:

i. Public sector banks comprising:

a. Nationalised banks: 14 banks werenationalized under the BankingCompanies (Acquisition and Transferof Undertakings) Act, 1970. Further,

* Market Risk: Market risk is the risk that is common toan entire class of assets or liabilities. The value ofinvestments may decline over a given time period simplybecause of economic changes or other events that impactlarge portions of the market. Asset allocation anddiversification can protect against market risk becausedifferent portions of the market tend to underperform atdifferent times. Market risk is also known as SystematicRisk.

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Banking Statistics

in 1980, six corresponding new bankswere nationalised under the theBanking Companies (Acquisition andTransfer of Undertakings) Act 1980.Prior to their nationalization, thesebanks were in the Private sector. Theminimum shareholding of theGovernment of Indian in these banksis 51 percent. IDBI converted itselfinto a bank w.e.f. October, 2004. Itwas included as ‘Other Public SectorBank’.

b. State Bank of India and AssociateBanks (SBI group): State Bank ofIndia (SBI) was established under theState Bank of India Act, 1955 and ittook over the undertaking of theImperial Bank of India established in1921. SBI has 7 associate banksestablished under the State Bank ofIndia (Subsidiary Banks) Act of 1959by taking over the bankingundertakings of certain formerprincely States in India.

ii. Private sector banks consists of:

a. Old Private Sector banks: These arethe banks existing in the privatesector before the issue of newguidelines for entry of private banksin 1993. These banks are registeredunder the Companies Act.

b. New Private Sector banks: These arebanks that were established underthe new guidelines in 1993 whichenforces relatively stricter entry pointnorms.

iii. Foreign banks: These banks operatethrough branches only. The ‘tests of entry’as applicable to Indian banks are alsoapplied to branches of foreign banks.Besides, the RBI insists on prior consentof home country regulator and ensuresthat the laws of the home country do notdiscriminate in any way against banksincorporated in India.

iv. Local Area Banks: Local area banks were

set up in private sector to cater to thecredit needs of the local people and toprovide efficient and competitive financialintermediation services in their area ofoperation. They are registered as a publiclimited company under the Companies Act,1956 and licensed under the BankingRegulation Act, 1949 and will be eligiblefor including in the Second Schedule ofthe Reserve Bank of India Act, 1934.Theminimum paid up capital for such a bankshall be Rs.5 crore. The promoters’contribution for such a bank shall at leastbe Rs.2 crore. The area of operation of theproposed bank shall be a maximum ofthree geographically contiguous districts.

2.1.4.3 Statistics on Interest Rates andSectoral Deployment of Credit

2.1.4.3.1. Data on Interest Rates

Data on interest rates offered on deposits /charged on credit by the scheduled commercialbanks are collected by the Monetary PolicyDepartment (MPD) of RBI on a regular basis.For a variety of reasons, data on interest ratesis of vital importance to the Reserve Bank. Forexample, interest rates have a major influenceon the demand and supply of bank deposits andcredit, saving / investment behaviour, havingclose linkages with output, prices, etc.

2.1.4.3.1.2. Measurement needs, Concepts,Definitions and Classification

2.1.4.3.1.2.1. Credit

As a step towards deregulation of interest ratesand providing more operational flexibility tobanks, Prime Lending Rate (PLR) was introducedin October 1994 on advances with credit limitsover Rs. 2 lakh. Since then, the norms relatingto the operation of PLR by banks had beenrationalised. Banks were given freedom to declaretheir own PLRs along with a maximum spreadin April 1999, banks were provided the freedomto offer tenor linked PLRs. Until theannouncement of Monetary and Credit Policy inApril 2001, PLR served as the ceiling rate forcredit limits up to Rs.2 lakh (other thanconsumer credit) and as floor rate for loans above

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Rs.2 lakh. In April 2001 Monetary and CreditPolicy, the PLR was converted to a reference orbenchmark rate for banks, which allowed banksto offer loans at sub-PLR rates to exporters orother creditworthy borrowers including publicenterprises on the lines of a transparent andobjective policy approved by their Boards.Nevertheless, the practice of treating PLR as theceiling for loans up to Rs.2 lakh continued, giventhe prevailing condition of the credit market inIndia and the need to continue withconcessionality for small borrowers.

With the change in PLR norms, the ReserveBank, monitors the trend in PLR of commercialbanks as also the actual trend in lending rates.For this purpose, the information system on PLRhad been modified so as to collect informationon PLR as well as minimum and maximumlending rate and also the share of outstandingcredit at, below and above PLR to facilitatemonitoring the actual trend of lending rates inIndia vis-à-vis PLR.

The Reserve Bank, in the Monetary and CreditPolicy for 2002-03 on April 2002, indicated itsintention of collecting maximum and minimuminterest rates on advances charged by banks andplace the same in the public domain to enhancetransparency. Accordingly, Reserve Bank isreceiving actual lending rates from scheduledcommercial banks (excluding RRBs).

2.1.4.3.1.2.2. Deposits

Banks were given freedom to determine theirrates for deposit with maturity of over 2 yearswith effect from October 1, 1995. Effective fromJuly 2, 1996, the rates of deposits for over 1year, were freed and minimum maturity periodwas reduced to 30 days from 46 days. EffectiveOctober 22, 1997, banks were given the freedomto determine their interest rates on term depositsof 30 days and over. The Reserve Bank has alsoencouraged the banks to put in place a flexibleinterest rate system for deposits with reset atsix-monthly intervals, along with the fixed rateoption for depositors in its Monetary and CreditPolicy Statement, 2002-03. Banks were allowedat their discretion to reduce the minimum tenorof retail domestic term deposits (under Rs.15

lakh) from 15 days to 7 days with effect fromNovember 1, 2004.


The data on interest rates in respect of differenttypes deposits and credit are collected onfortnightly/monthly/quarterly basis from theSCBs in pre-defined formats. For deposits, theclassification is based on domestic deposits, NREand NRNR deposits and is maturity period-wise.In the case of quarterly data on credit, the majoraccount types are cash credit, demand loans andterm loans with maturity period-wise break-up.For each of these categories, data includes PLR,minimum and maximum rates charged(excluding extreme values), interest rate rangeat which 60 per cent or more business iscontracted and amount outstanding below PLR,at PLR and above PLR*. Data on export credit(in Rupee terms) is collected for - pre-shipmentand post-shipment export credit, which arefurther categorized according to duration as perexport credit norms.

Interest rates on term deposit for various tenorscan be known from which the interest rate rangeaccording to the groups of the banks can beworked out.

Monthly data on deposit rates offered by Publicsector banks, Private sector banks and Foreign

* BPLR: Banks are free to fix Benchmark Prime LendingRate (BPLR) for credit limits over Rs.2 lakhs with theapproval of their respective Boards. BPLR has to bedeclared and made uniformly applicable at all thebranches. The banks may authorize their Asset-LiabilityManagement Committee (ALCO) to fix interest rates onDeposits and Advances, subject to their reporting to theBoard immediately thereafter. The banks should alsodeclare maximum spread over the BPLR with the approvalof the ALCO/Board for the advances.

Sub BPLR: Downward flexibility of PLR emerged in therecent past as a significant policy issue for the RBI,especially with respect to credit delivery to small andmedium borrowers, at reasonable costs. Sub-PLR lendinghad enabled corporates to raise funds at competitive ratesfrom banks without incurring any additional cost towardsstamp duty, dematerialisation costs or fee payments toissuing/paying agents. The BPLR was introduced tobestow larger transparency in pricing of bank credit.However, with sub-PLR lending, the spreads betweenminimum and maximum lending rates have risen in asignificant manner.

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Banking Statistics

banks of various maturities are published inRBI’s various publications such as Bank’sAnnual Report, Report on Trend & Progress ofBanking in India, Macroeconomic & MonetaryDevelopments, etc.

The quarterly lending rates data of Scheduledcommercial banks are available on the RBIwebsite since quarter ended June 2002. The dataare also available bank-group wise consolidatedposition on the range of actual lending rates ofcredit, with credit limit of Rs.2 lakh and above,other than export credit; bank-group wise rangeof median interest rates on credit, with creditlimit of Rs.2 lakh and above other than exportcredit; bank-group wise range of actual lendingrates; bank-group wise median interest rates onexport credit; lending rates of individual bankson export credit as well as other credit, havingcredit limit Rs.2 lakh and above under demandand term loans.

2.1.4.3.1.4. Ensuring Quality Standards

Good quality data is a pre-requisite for anyinformed decision-making process. Appropriatesystem for ensuring data quality is in place.

2.1.4.3.2. Sectoral Deployment of Credit

Statistics on flow of gross bank credit to differentsectors of the economy, viz.; agriculture,industry, etc., is collected and compiled throughBSR 1 return on an annual basis. In view ofthe need for such information on a more frequentintervals and with minimum time lag in thecontext of formulation of policy, Monetary PolicyDepartment collects provisional information onsectoral deployment of credit from select bankson a monthly basis, in addition to the annualdata collected through BSR system. Suchinformation provides an indication of themovements in flow of bank credit across varioussectors and industries and provides inputs foranalysis. The consolidated information based onthe data is published in various publications ofthe RBI.

2.1.4.3.2.1. Measurement Needs of the Area

The data on flow of bank credit to differentsectors of the economy are useful in analysis

the direction of credit flows, portfolio changes,linkages with the other macroeconomic variablesand for providing inputs for policy making. Thedata can also be of use to the researchers.

2.1.4.3.2.2. Concepts, Definitions andClassification

The broad concept of gross bank credit is thesame as in BSR. The concepts and classificationare broadly in alignment with that of BSR/NIC,except in the case of loans to construction sector.Besides, these data provide more details ofpersonal loans. The data are collected for totalnon-food gross bank credit divided into fourmajor sectors, viz.; Agriculture, Industry, Servicesand Personal Loans with further classificationon select sub-sectors and also on credit to thepriority sectors. Industrial classification includesdata on major industries includinginfrastructure. The classification of data onsectoral deployment of credit has changed fromtime to time with structural shifts in sectoraldeployment of credit. Some features of theclassification is given below:

a. Agriculture: Includes direct as well asindirect credit to agriculture.

b. Industry: Credit given to manufacturingsector. It includes credit given to foodprocessing, textiles, petroleum, chemicals,cement, metals, engineering, vehicles, gemsand jewellery, construction andinfrastructure industries.

c. Services: Include credit given to transportoperators (excluding water transport),computer software, tourism, hotels andrestaurants, shipping (water transport),professional and other services, etc. Realestate loans include credit given toindividuals/firms engaged in development ofreal estate activities (like preparation ofresidential/ commercial buildings/complexes, land development, etc. for thepurpose of purchase/ sale/ lease of realestate, etc.).

d. Personal Loans: Include credit given toindividuals for their own consumptionpurpose; loans to individuals for purchase

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of consumer durables; residential house; foreducation; personal loans given againstsecurity of fixed deposits or share/debentures; credit card outstandings, etc.Credit given to individuals as business loansis not included in personal loans, but theyare classified into the respective businessactivity (industry/ service).

e. Priority Sector: The loans under prioritysector are classified as per the extantdefinition given by the RBI from time totime. The details of credit to agriculture,small scale industry, housing, transportoperators, computer software under prioritysector criteria are required to be shownseparately.

Aggregate data for all reporting banks ispublished for the sectoral classification.


The data are collected monthly from the selectedbanks in a pre-defined specific format onoutstanding credit as on last reporting Friday ofthe month. The selection of banks is based onthe size of their business and includes publicsector banks, select private sector and foreignbanks. Banks with large business are includedin the sample so as the total non-food grossbank credit of all select banks comprises above90 per cent of the total non-food gross bankcredit of all the scheduled commercial banks.The returns are received in printed form throughe-mail. There are plans to receive these data on-line from banks.

2.1.4.3.2.4. Ensuring Quality Standards

Good quality data is a pre-requisite for anyinformed decision-making process. Appropriatesystem for ensuring data quality is in place. Inorder to improve quality of data, the coverage isalso extended from time to time. The last suchrevision in classification of data and coverage ofbanks is effective since September 2005.

2.2 Statistics on Cooperative Banks

The cooperative movement in India startedand originated as a measure againstrural poverty, aggravated by chronic

indebtedness of the farmers and practiceof usuary at its worst by themoneylenders. Agrarian disturbances in1875 in the Deccan against themoneylenders necessitated the enactmentof Taccavi Legislation by the governmentand also led to the concept of thecooperative approach. The Northern IndiaTaccavi Loan Act, 1875, the LandImprovement Loans Act, 1883, theAgriculturist Loans Act, 1884, etc. were,all enacted to facilitate the availability ofcredit to farmers. In 1892, Sir FederickNicholson recommended the establishmentof rural cooperative credit societies onGerman pattern. The Famine Commission(1901) recommended introduction ofcooperatives in the country. In 1904, theCooperative Credit Societies Act wasenacted by the Imperial Government tofacilitate organisation of credit cooperativesand confer upon them special privilegesand facilities, the scope of which wassubsequently enlarged by the morecomprehensive Cooperative Societies Act of1912. Under the Government of India Act,1919, the subject of Cooperation wastransferred to the then Provinces, whichwere authorized to enact their owncooperative laws. Under the Governmentof India Act, 1935, cooperatives remaineda provincial subject. In order to administerthe operations of cooperative societieswhere membership was from more thanone province, the Government of Indiaenacted the Multi-Unit CooperativeSocieties Act, 1942, which wassubsequently replaced by the Multi-stateCooperative Societies Act, 1984, underentry 44 of the Union List.

The societies were not in a position toextend loans to farmers so that the farmersmay liquidate past debts, redeem theirland and other assets from usuriousmoneylenders. Loans from cooperativesocieties were also not enough to enablefarmers to improve upon their land andaugment their incomes. It was felt that thelong term (LT) loans needed by farmers

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Banking Statistics

for these purposes would have to be metby a separate set of institutions. Thisrealization led to the establishment of thecooperative land mortgage banks (LMBs)in the early 1920s. The first cooperativeLMB was set up in Punjab in 1920,followed by two more in the MadrasPresidency in 1925.

Later, the All India Rural Credit SurveyCommittee (AIRCSC) recommendedestablishment of a separate institution,which could provide LMBs the resourcesfor long term lending to farmers for thedevelopment of agriculture. Therecommendation led to the establishmentof the Agricultural Refinance Corporationin 1963 and enabled the LT structure toexpand rapidly and change from beingland ‘mortgage’ banks to land‘development’ banks (LDBs).

2.2.1. Structures of Cooperative Banks

Co-operatives are structured into twoseparate arms namely short-term (forproviding Production Credit) and long-terminstitutions (for providing InvestmentCredit). The short-term co-operative creditstructure has at its base the PrimaryAgricultural Credit Societies (PACS). Thelong-term co-operative credit structurecomprises the Primary Agricultural andRural Development Banks. These groundlevel institutions cater to villages usingfunds received from higher financinginstitutions.

The short-term cooperative credit structureconsists of 31 State Cooperative Banks(SCBs), 367 District Central CooperativeBanks (DCCBs) and 1,05,735 PrimaryAgricultural Credit Societies (PACS) as on31 March 2005. The long-term co-operativecredit structure consisted of 20 StateCooperative Agriculture and RuralDevelopment Banks (SCARDBs) (8 unitaryand 12 federal/mixed structures) with 727Primary Cooperative Agriculture and RuralDevelopment Banks (PCARDBs) as on 31March 2005.

2.2.2. Data Dissemination

National Bank for Agriculture and RuralDevelopment (NABARD) is the major source ofdata on cooperatives in India.1 Besides data oncooperative movements, NABARD brings out fourregular publications. Title-wise contents of thesepublications are discussed below:

Dossier on Cooperatives: This publicationpresents data on Cooperative credit Structures,viz., Short Term and Long Term on yearly basis.Consolidated information of SCBs, DCCBs andSCARDBs and PCARDBs on various parameters,viz., Resources, Investment, Outreach, Recovery,Management, Profitability, Classification ofAssets, Erosion in Assets, Dividend payingBanks, and Market share of Business are alsopresented.

Overview on Cooperatives: This publication isbrought out annually by NABARD (InstitutionalDevelopment Department (IDD)), on theperformance of Cooperative credit Structures inthe country. The performance is reviewed on thevarious parameters with reference to previousyear.

Financial Parameters and Financial RatioAnalysis: This publication presents an analyticaloverview of performance of cooperatives basedon the annual balance sheet information. Variousimportant ratios on financial parameters, viz.,Financial Return, Financial Cost, FinancialMargin, Cost of Management, Operating Margin,Risk Cost, Miscellaneous Income, and NetMargin, etc., are analysed. In addition, Credit-Deposit Ratio, Recovery and Non-PerformingAssets (NPAs) to Loans Outstanding are alsopresented.

The major source of information for theabovementioned publications is the Balance-Sheet (as at the end of the financial year i.e.,March 31). Sometime un-audited data are alsoconsidered. The information/details are collectedby Regional Offices of NABARD from the SCBs/SCARDBs in the prescribed format. RegionalOffices consolidate the information separately by

1 The data on Urban Cooperative Banks are, however,disseminated by RBI in its key publications.

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ST/LT structure and thereafter forward to HeadOffice for consolidation at the national level.Recovery position giving the details of Demand,Collection and Balance (DCB) of loans is collectedas at the end of 30 June every year. The DCBhas worked out for each institution as also aconsolidated position for the institutions as awhole, in particular structure for a State.Regional Offices compile the details on the basisof audited figures and in case the details areunaudited, they indicate specifically so that suchof the details can be checked up with auditedfigures and rectified at subsequent validation.Client institutions, viz., SCBs, DCCBs, SCARDBsand PCARDBs are advised to include the subjectof data compilation in their Training Programmesas well.

Statistical Statements Relating to CooperativeMovement in India: This publication is broughtout in two parts - Part I relates to Credit Societies(SCBs, CCBs, ICBs, PACS, GBs, PCBs, PNACS,SCARDBs and PCARDBS) and Part II relates toNon-Credit Societies (All Marketing Societies, AllProcessing Societies, Farming, Fisheries, Weaver,Housing, Consumer Co-operative, ForestLabourer, Other Industrial Societies, etc. Thecontents of the Publication includes statisticaldata like number, membership, liabilities, assets,operations, etc., in respect of both Credit andNon-credit societies based on audited BalanceSheet and Profit & Loss accounts for a particularyear pertaining to the respective co-operativesocieties. The source of data for the publicationis SCBs, CCBs, ICBs, SCARDBs, RCS, etc., forCredit Co-operative Societies and

RCS and Functional Registrars in respect of Non-Credit Co-operative Societies.

The work pertaining to compilation of thestatements was originally being done by theDepartment of Commercial Intelligence andStatistics, GoI since 1932 and published by theManager of Publications, Delhi. It wassubsequently entrusted by them to RBI in March1942, with effect from the issue for 1940-41 asthey considered that the Agricultural CreditDepartment of the Bank, being in close touchwith the Co-operative Movement in the country,was in the best position to undertake the work,

especially as, in the normal course of its duties,it was already collecting data, statistical andotherwise, relating to the working of variousclasses of co-operative societies and considerableduplication of effort would be avoided. This workwas then transferred to NABARD in 1982 by RBIconsequent upon the transfer of the regulatoryfunction of RBI in respect of Cooperative Creditstructure to NABARD.

The Department of Agriculture and Co-operationunder the Ministry of Agriculture, GoI, isconcerned with the development of cooperativesand ensuring uniform spread of cooperativemovement in the country. To have anunderstanding of the developments ofCooperatives and for implementation of variouscooperative development schemes, the vitalinformation was sought to be compiled at oneplace. These Statements serve as database forGovernment of India and Reserve Bank of Indiain policymaking and also as a source materialfor internal use and other publications. Thescope of the publication has increased over timewith the diversification of activities, under Co-operative Movement in the country.

A Standing Committee known as “ReviewCommittee on Co-operative Statistics” – Co-operative Movement in India” under the Ministryof Agriculture is entrusted with the responsibilityof rationalizing the system of collection ofstatistical data and suggesting ways and meansfor early collection and publication of the same.

The publication upto the period 1942-43included statistics in respect of the Co-operativeMovement in British India and only nine IndianStates were included in the Publication.Subsequently, from the period 1943-44, all thestates where at least one hundred and more co-operative organizations existed, were alsoincluded in the publication. A new set of formsto make the statistics more comprehensive andclear, were approved by the GoI and the revisedforms were adopted for 1949-50. Some of themodifications introduced from 1949-50 were:

a. The data relating to credit and non-creditsocieties - agricultural as well as non-agricultural, were separately presented.

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Banking Statistics

b. A new table, showing separately theoperations of provincial and central non-credit societies was included.

c. Several new pictorial and graphicalillustrations, and figures at a glance wereintroduced.

From the publication for the year 1950-51onwards, the statistical data for all theconstituent states of the Indian Union wereavailable and there was uniformity in the periodto which the data relate, i.e, the statisticalstatements in respect of all States except Jammuand Kashmir pertained to one uniform period,viz., the year ended 30 June.

From 1955-56 onwards, few additional featureswere added in the publication, viz., data relatingto marketing societies were given separately andthree new abstract tables showing the progressmade by PACS, DCCBs and SCBs during thefive-year period 1951-56.

The structure and contents of statisticalstatements were reviewed and redrawn in theyear 1995 by the Review Committee onCooperative Statistics’ set up by Government ofIndia. The input formats for collection of data ofCredit and Non-Credit Co-operatives which wereoriginally hundred (100) in number were revisedand reduced to fifty one by removal of duplicateformats by merging similar formats, Omissionof formats that are not widely used and exclusionof redundant items. The following new items wereadded to serve the requirements in presentstructure of Co-operatives.

a. To assess the fixed assets, depreciationvalues and other related information, inputitems on land, building, plant andmachinery were added.

b. Items on membership break up as SC, STand Women have been added.

c. In credit societies’ formats, items onDebentures were added.

d. In non-credit sector formats, many newclasses of societies under Industrial Co-operatives, Processing Societies, Weavers’Societies, Fisheries Co-operatives, etc., wereadded.

e. Period of reporting has been changed fromend of June to end of March (i.e. financialyear).

The broad contents of Part I and Part II of thepublication are given in Annex 2.13. Thepublication attempts to ensure quality standard,and for the purpose the following steps areundertaken:

i. Compilation of data on the basis ofaudited data submitted by the State leveland District level agencies.

ii. Sensitising officials of offices/agenciesproviding data for compilation of theStatistical Statements, by organizingzonal workshops, to facilitate accurate,complete and prompt submission of data.

iii. Validation, by comparison of the outputtables with previous year’s tables. In caseof discrepancies, clarification is soughtfrom the concerned agency.

iv. Validation of entries by rechecking of vitaldata vis-à-vis annual report and balancesheets received from agencies.

2.3. Statistics on Regional Rural Bankspublished by NABARD

In 1972, the Banking Commission observed intheir report that despite the massive expansionof network of commercial Banks, there wouldstill be the need and possibility of havingspecialised network of bank branches to caterto the needs of the rural poor. This lead to theconcept of “rural bank” by 1975, when thestructure of rural money lenders was regulatedunder the Government’s efforts to eradicate ruralindebtedness as a part of its 20 point economicprogramme, and an urgent need was felt for analternative institutional mechanism to reach therural poor particularly the small and marginalfarmers, artisans and agricultural labourers.Consequently, GOI, vide, its notification dated 1July 1975, constituted a Working Group on ruralbanks under Chairmanship of Shri M Narasimhan.

The working group submitted its report on 31July 1975 and recommended for setting up ofstate sponsored, region based, rural orientedcommercial banks which would blend the ruraltouch, local feel, familiarity with rural problemsand low cost profile with the professional

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discipline, ability to mobilise deposits and accessto central money markets and the modernisedoutlook of rural commercial banks. The role asperceived for this new institution was tosupplement and not supplant the existingfinancial institution in the rural sector. Further,it was envisaged that this institution would helpin reducing regional imbalances by mobilisingand simultaneously deploying resources in thesame region. It was asserted that these bankswould cover primarily the small and marginalfarmers, landless labourers, rural artisans, smalltraders and other weaker sections of the ruralsociety for the productive credit needs and tolimited extent, the consumption credit needs.

Based on the recommendations of the workinggroup of rural banks, the first 5 RRBs wereestablished on 2 October 1975 under presidentialordinance that followed by the promulgation ofthe Regional Rural Banks Act in April 1976. TheRRBs were required, in particular, to undertakethe business of providing credit facility to thepoorer sections of rural society, generally referredto as ‘target group’. The basic objective of settingof RRBs was provision of credit facility for cropproduction and allied purposes to the rural poor,who had very limited access to the formal creditsystem as it existed in early seventies. As such,85 RRBs were set up by 1980 and the numberof RRBs stood at 196 as on 31 March 2005.

2.3.1. Measurement Needs of the area

To improve the RRBs’ financial health, NABARDis instrumental in preparation of DevelopmentAction Plan (DAP) and is having commitment forits execution by the RRBs after signing an MoUwith the respective sponsor bank. NABARD alsointroduced a comprehensive monitoring andreview mechanism w.e.f. 01 April 1995 bysuitably modifying the formats for QuarterlyProgress Report to collect the required data andinformation through statutory statements.

2.3.2. Concepts, Definition and classification

Based on the information received through theabove statements, following publications arepublished by NABARD for fulfilling therequirements of statute, use of the owners andfor the use of customers and all othershareholders.

Review of Performance of RRBs: The publicationcontains performance of RRBs with sustainableviability, current viability and loss making RRBs.This information is provided for two years in theform of state-wise and sponsor bank-wise datafor RRBs. This also comprises the write up onvarious important parameters like deposits,borrowings, investments, loans and advancesand profit and loss position of RRBs for twoyears. This data is used by GOI for inclusion intheir annual report.

Key Statistics of RRBs: This publication containsimportant broad parameters and financial ratioanalysis for the financial year. This informationis compiled and finalised from the statementQuick Review Report (QRR) which is obtainedfrom all RRBs irrespective of their audits. Thesedata are given both state-wise, sponsor bank-wise and each individual RRB-wise. Certainsalient features of the banks are provided for 5years period for the purpose of assessingprogress.

Financial Statements of RRBs: Based on theinformation received from all RRBs through theirannual reports and audited balance sheets, theassets and liability position of the RRBs ispublished statwise, sponsor bank wise andindividual RRB wise for a period of 2 years (currentand previous). It also comprises of various financialratios and other important information like NPA,Gross NPA, Net NPA, CD ratio, recovery percentage,etc., for the same period.

Statistics on RRBs: This publication comprises22 statements providing detailed information onthe performance of RRBs during the financialyear. Details of the statements are presented inAnnex 2.14.

2.3.3. Sources and Systems

The sources of information are Quick ReviewReport (QRR), Monitoring and Review Mechanism(MRM) Statements, Demand Collection andBalance (DCB) statements, Audited BalanceSheets and /or Annual Reports of the banks asat the end of financial year, i.e., 31 March. Thefigures nay be audited or unaudited. Theinformation / details are collected through thesponsor bank and NABARD’s Regional Offices

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Banking Statistics

are also involved for follow up with the RRBs soas to receive the data in prescribed format.Information received from RRBs are compiled andconsolidated at HO level.

2.3.4. Ensuring Quality Standards

All the data are checked with reference toconsistency, wide variations and are acceptedonly with adequate explanation. All the abovepublications are available in printed form till theyear March 2003 and these publications areavailable in CD form from March 2004 onwards.

2.4. Statistics on Urban Cooperative Banks

Urban Cooperative Banks (UCBs), also referredto as primary cooperative banks, play animportant role in meeting the banking needs ofurban and semi urban areas of the country. Theymobilise savings from the middle and lowerincome groups and purvey credit to smallborrowers, including weaker sections of thesociety and thereby fill up an important gap inthe mechanism for delivery of financial services.The data collected from the UCBs in UrbanBanks Department (UBD) of RBI through On-site inspection and Off-site Surveillance aremostly used for supervision. While On-siteInspection is the predominant mode ofsupervision, Off-site Surveillance (OSS) wasstarted for 55 scheduled banks in April 2001.The scheduled banks were required to submit10 OSS returns to RBI. Subsequently, thesereturns were rationalized with the objective ofincreasing the breadth and depth of informationbeing obtained from UCBs, while reducing thevolume of data required to be submitted by them.Thus, from March 2005, the number of OSSreturns was reduced from 10 to 8 (7 quarterlyand one annual). Number of returns required tobe submitted by UCBs to RBI varies with theirsize & scheduled status, as under:

Scheduled UCBs 32

Non Scheduled UCBs withdeposits > Rs. 100 crore 26

Tier II Non Scheduled UCBswith deposits > Rs. 50 crore 26

Tier I & Tier II banks withdeposits < Rs. 50 crore 18

Box: 2.1

Criteria for Gradation of UrbanCo-operative Banks

Urban co-operative banks are classified into fourgrades, viz., Grade I, II, III and IV on the basis ofcertain broad prudential indicators in the followingmanner:

(a) Grade I: Sound banks having no supervisoryconcerns.

(b) Grade II: Banks meeting any one of thefollowing parameters:

� Capital to risk-weighted asset ratio (CRAR):one per cent below the prescribed norms;or

� Net non-performing assets (NPAs) of 10 percent or more but below 15 per cent; or

� Incurred net loss in the previous financialyear; or

� Defaulted in the maintenance of cashreserve ratio (CRR)/statutory liquidity ratio(SLR) in the previous financial year and/or there is more or less continuous defaultin maintenance of CRR/SLR during thecurrent year.

(c) Grade III: Banks meeting any two of thefollowing parameters:

� CRAR below 75 per cent of the minimumprescribed but 50 per cent or above thelevel required.

� Net NPAs of 10 per cent or more but lessthan 15 per cent.

� Incurred net losses for two years out ofthe last three years.

(d) Grade IV: Banks meeting the followingconditions:

� CRAR less than 50 per cent of theprescribed limit; and

� Net NPAs of 15 per cent or more as onMarch 31 of the previous year.

In addition, as required under the BankingRegulation Act, the Balance Sheet data areobtained from UCBs at monthly intervals. Thenature of data obtained from banks is detailedin Annex 2.15.

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2.4.1. Measurement needs of the area

UCBs account for about 5 per cent of depositsand almost equal proportion of advances of thebanking system. Despite their small share inbusiness, UCBs contribute significantly towardssocial and economic development, as instrumentsof financial inclusion. Presently, the financialposition of several UCBs is a matter of concern.RBI has a system of classifying UCBs into fourgrades based on their performance and strength.While Gr-I banks are considered sound, Grade-II UCBs have minor weaknesses, where responserequired is limited to minor adjustments, andGrade-III and Grade-IV banks signify weakness/sickness (See Box 2.1).

Out of 1853 UCBs in March 2006, 677 UCBs(37%) were in Grade III and Grade IV signifyingweak and sick banks. Also, although UCBsaccount for 5% of total advances of the bankingsystem, they comprise approximately 20% of totalNPAs. Thus, the UCBs are significant both fromthe point of view of their ability to serve themiddle and lower classes and marginalizedsections of society, as also because of theirimportance in maintaining stability of thefinancial system. As such, it is important tomaintain a system of ‘continuous supervision’over UCBs and also establish an early warningsystem, to enable prompt action at an incipientstage of deterioration in the financial position ofthese banks.

2.4.2. Concepts, Definitions andClassifications

a. Tier I & Tier II UCBs – UCBs havingdeposits upto Rs 100 crores, whoseoperations are limited to a single district,are classified as Tier I banks and otherbanks are classified into Tier II banks.

b. Grades - UCBs are classified into differentgrades based on their performance andstrength, as stated earlier (see Box 2.1)

c. NPA – An asset becomes a non-performingone, when it ceases to generate income forthe bank. Earlier an asset was consideredas NPAs based on the concept of ‘past due’.With effect from March 31, 2001, the

concept of ‘past due’ has been dispensedwith and any amount due to the bankunder any credit facility is ‘overdue’, if it isnot paid on the date fixed by the bank.W.e.f March 31, 2004, NPAs are identifiedbased on 90 days overdue norm.

d. NPA definition is different for Tier I banksvis-à-vis international norms - Banks whoseoperations are limited to a single districtand have deposits of less than Rs.100 crore(Tier –I banks) have been allowed to adopt180 days delinquency norms forclassification of assets as non-performing,instead of the 90 days norm which isapplicable for the larger cooperative and allcommercial banks.

e. Net Worth - Paid-up capital + Reserves(Statutory and revaluation reserves) +Unappropriated profits (or minusaccumulated loss) - Intangible Assets -Shortfall in provisions for impaired assets– Investment in subsidiaries

f. Total Assets includes a contra item, viz.,Overdue Interest Reserves (OIR)

2.4.3. Sources and Systems

Data relating to UCBs are received throughvarious returns. The returns submitted by UCBsand agencies involved in data collection arepresented in Annex 2.15. The data submitted bybanks are as prescribed by RBI Act and BankingRegulation Act. RBI obtains certain data inexercise of its powers given under Section 27(2) of BR Act.

2.4.4. Ensuring Quality Standards

In order to maintain the data integrity, theapplication software adopted for the purposeprovides checks for data consistency within andacross returns. Quality of data can also bechecked through the software for comparing on-site with off-site data for the same period. Thequality of data provided by the regional officesis also checked in the form of variance reportscompiled across time. Consistency checks acrossbanks of similar size are also done throughstandard reports.

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Banking Statistics

Annex 2.1

Details of Balance Sheet Items and Notes on Accounts

A. Balance Sheet

Item Schedule Coverage Notes and Instructions for compilation

Capital 1. Nationalised Banks The Capital owned by Central Government as on theCapital (Fully owned date of the balance sheet should be shown.In the case ofBy Central other Indian banks, Authorised, Issued, Subscribed,Government) Called up capital should be given separately. Calls-in-

arrears will be deducted from the called-up capital whileOther Banks (Indian) the paid-up value of forfeited shares should be addedAuthorised Capital thus arriving at the paid-up capital. Where necessary,(…..shares of Rs. ….. items which can be combined should be shown undereach) one head for instance ‘Issued and Subscribed Capital’.Issued Capital (…..sharesof Rs. ….. each) In the case of Banking Companies incorporated outsideSubscribed Capital India, the amount of deposit kept with Reserve Bank of(…..shares of Rs. ….. India, under sub-section 2 of section 11 of the Bankingeach) Regulation Act, 1949 should be shown under the headCalled up Capital ‘capital’; the amount, however, should not be extended to(…..shares of Rs. ….. the outer column.each)Less : Calls unpaid Notes – GeneralThe changes in the above items, if any,Add : forfeited shares during the year, say, fresh contribution made by thePaid up Capital Government, fresh issue of capital, capitalisation ofBanking Companies reserves, etc. may be explained in the notes.incorporatedoutside India

Reserves 2 I) Statutory Reserves Reserve created in terms of section 17 or any other& section of Banking Regulation Act must be separatelySurplus disclosed.

II) Capital Reserves The expression ‘capital reserves’ shall not include anyamount regarded as free for distribution through theprofit & loss account. Surplus on revaluation or saleof fixed assets should be treated as capital reserves.

III) Share Premium Premium on issue of share capital may be shownseparately under this head.

IV) Revenue and The expression ‘Revenue Reserves’ shall mean anyother Reserves reserve other than capital reserve. This item will include

a) Investment all reserves, other than those separately classified. TheFluctuation expression ‘reserve’ shall not include any amount writtenReserve off or retained by way of providing for depreciation,

renewals or dimunition in value of assets or retained byV) Balance of Profit way of providing for any known liability.

Includes balance of profit after appropriations. In case ofloss the balance may be shown as a deduction.Notes – Generali) Movements in various categories of reserves should

be shown as indicated in the schedule.

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Deposits 3. A.I. Demand Depositsi) from banks Includes all banks deposits repayable on demand.ii) from others Includes all demand deposits of the non-bank sectors.

Credit balances in overdrafts, cash credit accountsdeposits payable at call, overdue deposits, inoperativecurrent accounts, matured time deposits and cashcertificates, etc. are to be included under this category.

II. Savings Bank Includes all savings bank deposits (including inoperativeDeposits savings bank accounts).Includes all types of banks

III. Term Deposits deposits repayable after a specified term.Includes alli) from banks types of deposits of the non-bank sector repayable afterii) from others a specified term. Fixed deposits, cumulative and

B. i) Deposits of recurring deposits, cash certificates, annuity deposits,branches in deposits mobilised under various schemes, ordinary staffIndia. deposits, foreign currency non-resident deposits

ii) Deposits of accounts, etc. are to be included under this category.Thebranches outside total of these two items will agree with the total deposits.India.

Notes – Generala) Interest payable on deposits (whether accrued and

due and accrued but not due) should not beincluded but shown under other liabilities.Deposits, repayment of which is subject torestrictions by its very nature, like margin deposits,security deposits from staff, etc. also should not beincluded under deposits but shown under ‘otherliabilities.’

b) Matured time deposits and cash certificates, etc.should be treated as demand deposits

c) Deposits under special schemes should be includedunder term deposits if they are not payable ondemand. When such deposits have matured forpayment they should be shown under demanddeposits.

d) Deposits from banks will include deposits from thebanking system in India, co-operative banks,foreign banks which may or may not have apresence in India.

Borro- 4. I. Borrowings in India Includes borrowings/refinance and rediscount obtainedwings i) Reserve Bank of from Reserve Bank of India.Includes borrowings/refinance

India and rediscount obtained from commercial banks(including co-operative banks)

ii) Other banks Includes borrowings/refinance and rediscount fromIndustrial Development Bank of India, Export-ImportBank of India, National Bank for Agricultural and RuralDevelopment and other institutions, agencies (includingliability against participation certificates, if any)

II. Borrowings outside Includes borrowings and rediscounts of Indian branchesIndia abroad as well as borrowings of foreign branches.Secured borrowings This item will be shown separately: Includes securedincluded above borrowings/refinance in India and outside India.

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Banking Statistics

Notes – Generali) The total of I & II will agree with the total borrowings

shown in the balance sheet.ii) Inter-office transactions should not be shown as

borrowings.iii) Funds raised by foreign branches by way of

certificates of deposits, notes, bonds, etc. should beclassified, depending upon documentation, as‘deposits’, ‘borrowings’ etc.

iv) Refinance obtained by banks from Reserve Bank ofIndia and various institutions are being broughtunder the head ‘Borrowings’. Hence advances will beshown at the gross amount on the asset side.

Other 5 I. Bills Payable Includes drafts, telegraphic transfers, mail transfersLiabi- payable, pay slip, bankers cheques, other miscellaneouslities II. Inter-Office items, etc.and pro- The inter-office adjustments balance, if in credit, shouldvisions III. Interest Accrued be shown under this head. Only net position of inter-

office accounts, inland as well as foreign should beIV. Deferred Tax shown here.

Includes interest due and payable and interest accruedV. Others but not due on deposits and borrowingsIncludes net

provision for income tax and other taxes like interest tax(less advance payment, tax deducted at source, etc.),surplus provisions in bad debts provision account,surplus provisions for depreciation in securities,contingency funds which are not disclosed as reservesbut are actually in the nature of reserves, proposeddividend/transfer to Government, other liabilities whichare not disclosed under any of the major heads such asunclaimed dividend, provisions and funds kept forspecific purposes, unexpired discount, outstandingcharges like rent, conveyance, etc. certain types ofdeposits like staff security deposits, margin deposits, etc.where the repayment is not free, should also be includedunder this head.

Notes – Generali) For arriving at the net balance of inter-office

adjustments all connected inter-office accountsshould be aggregated and the net balance only willbe shown, representing mostly items in transit andunadjusted items.

ii) The interest accruing on all deposits, whether thepayment is due or not, should be treated as aliability.

iii) It is proposed to show only pure deposits under thehead ‘deposits’ and hence all surplus provisions forbad and doubtful debts contingency funds, secret


84


reserves, etc. which are not netted off against therelative assets should be brought under the head‘Others’ (including provisions).

Cash and 6 I. Cash in hand Includes cash in hand including foreign currency notesbalances (including foreign and also of foreign branches in the case of banks havingwith the currency notes) such branches.Reserve Includes the balance maintained with the Reserve BankBank of II. In Current Account of India in Current Account.India with Reserve Bank

of India.

Balances 7 I) In India Includes balances held with the Reserve Bank of Indiawith i) Balances with other than in current accounts, if any.banks Reserve Bank of Includes all balances with banks in India (includingand India (other than co-operative banks). Balances in current accounts andmoney in current deposit accounts should be shown separately.at call account) Includes deposits repayable within 15 days or less thanand ii) Balances with 15 days’ notice lent in the inter-bank call moneyshort other banks market.notice in India Includes balances held by foreign branches and balances

Current accounts held by Indian branches of the banks outside India.Deposit accounts Balances held with foreign branches by other branches

iii) Money at call and of the bank should not be shown under this head butshort notice with should be included in inter branch accounts. Thebanks and other amounts held in ‘current accounts’ and ‘depositinstitutions. accounts’ should be shown separately.Includes deposits

II) Outside India usually classified in foreign countries as money at calli) Current accounts and short notice.ii) Deposit accounts

Invest- 8 I. Investments in India Includes Central and State Government securities andments i) Government Government treasury bills.Securities other than

securities Government securities, which according to the Statutesii) Other approved are treated as approved securities, should be included

securities here.iii) Shares Investments in shares of companies and corporations notiv) Debentures included in item (ii) should be included here.

and Bonds Investments in debentures and bonds of companies andv) Investments in corporations not included in item (ii) should be included

subsidiaries/ here.associate Investments in subsidiaries/associate companies shouldcompanies. be included here. A company will be considered as an

vi) Others associate company for the purpose of this classification ifII. Investments outside more than 25% of the share capital of that company is

India held by the bank.Includes residual investments, if any,i) Government like gold.

securities All foreign Government securities including securities(including local issued by local authorities may be classified under thisauthorities) head.All other investments outside India may be shown

ii) Others under this head.


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Banking Statistics

Advances 9 A. i) Bills purchased In classification under Section ‘A’, all outstandings – inand Discounted India as well as outside – less provisions made, will be

ii) Cash credits, classified under three heads as indicated and bothoverdrafts and secured and unsecured advances will be included underloans repayable these heads.on demand

iii) Term loans All advances or part of advances which are secured byB. i) Secured by tangible assets may be shown here. The item will include

tangible assets advances in India and outside India.ii) Covered by Bank/

Government Advances in India and outside India to the extent theyGuarantee are covered by guarantees of Indian and foreign govern-

iii) Unsecured ments and Indian and foreign banks are to be included.

C.I. Advances in India All advances not classified under (i) and (ii) will bei) Priority sectors included here.ii) Public sector Advances should be broadly classified into ‘Advances iniii) Banks India’ and ‘Advances outside India’. Advances in Indiaiv) Others will be further classified on the sectoral basis as

indicated. Advances to sectors which for the time beingII. Advances outside are classified as priority sectors according to the

India instructions of the Reserve Bank are to be classifiedi) Due from banks under the head ‘Priority sectors’. Advances to Centralii) Due from others and State Governments and other Government

undertakings including Government companies andcorporations which are, according to the statutes, to betreated as ‘public sector’. All advances to the bankingsector including co-operative banks will come under thehead ‘Banks’. All the remaining advances will beincluded under this head ‘Others’ and typically thiscategory will include non-priority advances to theprivate, joint and co-operative sectors.

Notes – General

i) The gross amount of advances including refinancebut excluding provisions made to the satisfaction ofauditors should be shown as advances.

ii) Term loans will be loans not repayable on demand.iii) Consortium advances would be shown net of

recoveries from other participating banks/institutions.

Fixed 10 I. Premises Premises wholly or partly owned by the bankingAssets company for the purpose of business including

residential premises should be shown against ‘Premises’.In the case of premises and other fixed assets, theprevious balance, additions thereto and deductions therefrom during the year as also the total depreciationwritten off should be shown. Where sums have beenwritten off on reduction of capital or revaluation ofassets, every balance sheet after the first balance sheet


86


subsequent to the reduction or revaluation should showthe revised figures with the date and amount of revisionmade.

II. Other Fixed Assets Motor vehicles and all other fixed assets other than(including furniture premises but including furniture and fixtures should beand fixtures) shown under this head.

III. Capital work-in-progress or premisesunder construction

Other 11 I. Inter-office The inter-office adjustments balance, if in debt, shouldassets adjustments (net) be shown under this head. Only net position of inter-

office accounts, inland as well as foreign, should beshown here. For arriving at the net balance of inter-officeadjustment accounts, all connected inter-office accountsshould be aggregated and the net balances, if in debit,only should be shown representing mostly items intransit and unadjusted items.

II. Interest accrued Interest accrued but not due on investments andadvances and interest due but not collected oninvestments will be the main components of this item.As banks normally debit the borrowers’ account withinterest due on the balance sheet date, usually theremay not be any amount of interest due on advances.Only such interest as can be realised in the ordinarycourse should be shown under this head.

III. Tax paid in advance/ The amount of tax deducted at source on securities,tax deducted at source. advance tax paid, etc. to the extent that these items are

not set off against relative tax provisions should beshown against this item.

IV. Stationery and stamps Only exceptional items of expenditure on stationery likebulk purchase of security paper, loose leaf or otherledgers, etc. which are shown as quasi-asset to bewritten off over a period of time should be shown here.The value should be on a realistic basis and costescalation should not be taken into account, as theseitems are for internal use.

V. Others This will include non-banking assets and items likeclaims which have not been met, for instance, clearingitems, debit items representing addition to assets orreduction in liabilities which have not been adjusted fortechnical reasons, want of particulars, etc. advancesgiven to staff by a bank as employer and not as abanker, etc. Items, which are in the nature of expenses,which are pending adjustments, should be provided forand the provision netted against this item so that onlyrealisable value is shown under this head. Accruedincome other than interest may also be included here.


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Banking Statistics

Contin- 12 I. Claims against the Liability on partly paid shares, debentures, etc. will begent bank not included in this head.liabilities acknowledged as debts.

II. Liability for partly Outstanding forward exchange contracts may bepaid investments. included here.

III. Liability on accountof outstanding Guarantees given for constituents in India and outsideforward exchange India may be shown separately.contracts

IV. Guarantee given This item will include letters of credit and bills acceptedon behalf of by the bank on behalf of its customers.constituents.a) In Indiab) Outside India Arrears of cumulative dividends, commitments under

V. Acceptances, underwriting contracts, estimated amount of contractsendorsements and remaining to be executed on capital account and notother obligations provided for etc. are to be included here.

VI. Other items forwhich the bank iscontingently liable

Bills for Bills and other items in the course of collection and notcollection adjusted will be shown against this item in the summary

version only. Not separate schedule is proposed.

B. Profit & Loss Accounts


Interest 13 I. Interest /discount on Includes interest and discount on all types of loans andearned advances/bills. advances like cash credit, demand loans, overdrafts,

export loans, term loans, domestic and foreign billspurchased and discounted (including those

II. Income on rediscounted), overdue interest and also interest subsidy,investments if any, relating to such advances/bills.

Includes all income derived from the investment portfolioIII. Interest on balances by way of interest and dividend.Includes interest on

with Reserve Bank of balances with Reserve Bank and other banks, call loans,India and other inter money market placement, etc.bank funds

Includes any other interest/discount income notincluded in the above heads.

Others

Other 14 I. Commission, Exchange Net profit on sale of Investments = Profit on sale ofIncome & brokerage Investments – Loss on revaluation of investments

II. Net Profit on sale ofInvestments

III. Net Profit on Net profit on revaluation of investments = Profit onrevaluation of revaluation of investments – Lossinvestments

IV. Net Profit on saleof land, building &other assets


88


V. Profit (net of loss)on exchangetransactions

VI. Income earned by Net profit on sale of land, building & other assetsway of dividends, etc. = profit on sale of land, building & other assetsfrom subsidiaries/ – Loss on sale of land, building & other assetscompanies and/orjoint venturesabroad/in India

VII. Miscellaneous Income

Interest 15 I. Interest on depositsExpended II. Interest on RBI/

Inter-Bank borrowingsIII. Others

Operating 16 I. Payments to andExpenses provisions for

employeesII. Rent, Taxes & LightingIII. Printing & StationeryIV. Advertisement and

PublicityV. Depreciation on

Banks’ propertyVI. Directors’ fees,

allowances andexpenses

VII. Auditors’ fees &expenses (includingbranch auditors)

VIII. Law chargesIX. PB Legal and other

expenses debitedin respect of PBaccounts

X. Postage, Telegram,Telephones, etc.

XI. Repairs andMaintenance

XII. InsuranceXIII. Other Expenditure

Provisions Provisions & Contingencies& Contin- made forgencies i) Income Tax

ii) Other Taxesiii) NPAsiv) Investmentsv) Others

Appro- I. Transfer to Statutorypriation Reservesof Profit II. Transfer to Capital

Reserves


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Banking Statistics

III. Transfer to InvestmentFluctuation Reserves

IV. Transfer to Debentureredemption reserves

V. Transfer to Otherreserves

VI. Transfer to ProposedDividend

VII. Transfer to Tax onDividend

VIII. Balance carried overto Balance Sheet

C. Notes on Accounts


Movement 17 I) Gross NPAsof NPAs II) Net NPAs

Lending 17 I) Advances to Capitalto Market SectorSensitive II) Advances to RealSectors Estate Sector

III) Advances toCommodity Sector

Maturity 17 I) DepositsProfile of II) BorrowingsSelected III) Loans & Advancesitems of IV) InvestmentsLiabilities V) Foreign Currency& Assets Assets and

VI) Foreign CurrencyLiabilities

Loans 17 I) Standard Assetssubjected during the yearto Res- II) Sub Standard Assetstructuring during the yearand III) Doubtful AssetsCorporate during the yearDebt Re-structured

Capital 17 I) Capital Adequacyadequacy RatioRatios II) Capital Adequacy

Ratio – Tier I andIII) Capital Adequacy

Ratio – Tier II

Business 17 I) Return on AssetsRatios II) Business (Deposits+

Advances) per employeeIII) Profit per employee


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Annex 2.2

Major Contents of the Publication ‘Statistical Tables Relating to Banks in India’

A. Tables based on information obtained through Basic Statistical Returns

A1. SUMMARY TABLES

Sr. No. Table

1. Offices of Commercial Banks in India

2. Population group-wise distribution of offices opened or closed by Commercial Banks

3. State and population group-wise distribution of offices opened by Commercial Banks

4. State and population group-wise distribution of centres and offices of Commercial Banks

5. State-wise distribution of deposits and credit of Scheduled Commercial Banks in India

6. State and bank group-wise distribution of deposits and credit of Scheduled CommercialBanks

7. Population group-wise distribution of deposits and credit of Scheduled Commercial Banks

8. Maturity pattern of term deposits of Scheduled Commercial Banks

9. Bank group-wise distribution of outstanding credit of Scheduled Commercial Banksaccording to occupation

10. Bank group-wise distribution of outstanding credit of Scheduled Commercial Banksaccording to size of credit limit

11. Distribution of outstanding credit of Scheduled Commercial Banks according to interestrate range

12. State-wise distribution of employees of Scheduled Commercial Banks

13. Population and bank group-wise distribution of employees of Scheduled CommercialBanks

14. Bank group-wise and occupation-wise weighted average lending rate and deposit rate

A2. BANK-WISE TABLES

15. Bank-wise and population group-wise number of offices of Scheduled Commercial Banks

16. Commercial Banks and their offices in States and Union Territories

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Banking Statistics

B. Tables Based on Information Collected from other Departments of the Bank /Other Institutions

B.1. SUMMARY TABLES

Sr. No. Table Source

1. Offices of Indian Commercial Banks outside India DBOD

2. Region-wise distribution of offices of State and District CentralCo-operative Banks RPCD

3. State-wise distribution of number of branches of State andDistrict Central Co-operative Banks NABARD

4. State-wise distribution of liabilities and assets of UrbanCo-operative Banks UBD

5. State-wise distribution of liabilities and assets of State Co-operativeBanks NABARD

6. State-wise distribution of liabilities and assets of District CentralCo-operative Banks NABARD

7. Liabilities and assets of Indian Scheduled Commercial Banks inforeign countries DBS

8. Ownership of deposits with Scheduled Commercial Banks RBI Bulletin

9. Outstanding advances of Scheduled Commercial Banks to exporters MPD

10. Outstanding advances of Scheduled Commercial Banks for publicfood procurement operations DEAP

11. Sector-wise gross bank credit of Scheduled Commercial Banks MPD

12. Industry-wise gross bank credit of Scheduled Commercial Banks MPD

13. Scheduled Commercial Banks’ advances under Priority Sectors RPCD

14. State-wise distribution of outstanding advances of ScheduledCommercial Banks to agriculture RPCD

15. State-wise distribution of outstanding advances of ScheduledCommercial Banks to small scale Industries, industrial estatesand road & water transport operators RPCD

16. Distribution of outstanding advances of Public Sector Banks toPriority Sectors RPCD

17. Distribution of outstanding advances of Public Sector Banks to‘Other Priority Sectors’ RPCD

18. Outstanding loans and advances of Public Sector Banks tosmall scale industries RPCD

19. Outstanding advances of Public Sector Banks under DifferentialRates of Interest (DRI) scheme RPCD

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20. Bank group-wise classification of loan assets of ScheduledCommercial Banks DBS

21. Composition of NPAs of Public Sector Banks DBS

22. Investments of Scheduled Commercial Banks RBI Bulletin

23. State-wise distribution of investments of Scheduled Commercial Banksin State Government Securities and Shares/Debentures/Bonds ofState Associated Bodies RBI Bulletin

24. Cash reserve ratio and interest rates W.S.S.(Weekly Statistical Supplement to RBI Bulletin)

25. Cheque clearances DEAP

26. Number of Clearing Houses DIT

27. Bank group-wise insured deposits DICGC

B 2. BANK-WISE TABLES

28. Bank-wise Non-Performing Assets (NPAs) of Scheduled Commercial Banks DBS

29. Bank-wise and category-wise employees of Scheduled Commercial Banks IBA

30. Bank-wise monthly stock prices NSE

31. Unclaimed deposits with Scheduled Commercial Banks DBOD

Sr. No. Table Source

93

Banking Statistics

Annex 2.3

LIST ‘A’

POPULATION GROUP

SerialNo.

Population Group of Centre * Population of Centre Code

1. Rural less than 10,000 1

2. Semi-urban 10,000 and above but less than 1 lakh 2

3. Urban 1 lakh and above but less than 10 lakhs 3

4. Metropolitan 10 lakhs and more 4

* For reporting the Place of Utilisation of Credit

LIST ‘B’

TYPE OF ACCOUNT

SerialNo.

Type of Account Code

1. Cash Credit 10

2. Overdraft 20

3. Demand Loan 30

4. Loan extended through Credit Cards 31

5. Term Loan(including interim cash credit pending sanction of term loans and installment credit)(1) Medium - Term Loans (i.e. loans and advances granted for a period of 41

above 1 year and upto and inclusive of 3 years)(2) Long - Term Loans (i.e. loans and advances granted for a period 42

above 3 years)

6. Packing credit 50(all export pre-shipment finance under any type of facility should becoded as packing credit)

7. Export bills purchased 61

8. Export bills discounted 62

9. Export bills advanced against 63

10. Advance against Export cash incentives and Duty draw back claims 64

11. Inland bills purchased 71

12. Inland bills discounted 72

13. Advances against import bills 80

14. Foreign Currency Cheques, TCs/DDs/TTs/MTs purchased 90

94


LIST ‘C’

TYPE OF ORGANISATION

SerialNo.

Organisation Code

1. Public Sector1.1 Central Government owned undertakings 11

(corporations, companies and subsidiaries of Central Governmentcompanies)

1.2 State Government 121.3 State Government owned undertakings (corporations, companies 13

and subsidiaries of State Government companies)1.4 Quasi-Government bodies like Local Authorities, Electricity Boards, 14

Housing Boards, Port Trusts, Universities, etc.

2. Co-operative Sector 20

3. Private Sector3 (a) Private Corporate Sector3.1 Public and Private limited companies not owned but managed by 31

Government (e.g. sick textile mills whose management is takenover by the Government)

3.2 Public and Private limited companies other than Government 32managed companies[Foreign Banks having branches in India, Non-profit institutions (NPIs)serving business (like FICCI, ASSOCHEM, CII etc.) and privately fundedquasi - corporate institutions (like large educational institutions which arefunded privately) are also included here]

3 (b) Private Sector – Others3.3 Partnerships, Propriety concerns and Joint families 333.4 Self-Help Groups and NGOs 343.5 Associations, Clubs, Trusts and Groups 35

4. Individuals (Singly or Jointly)4.1 Male 414.2 Female 42

5. Joint SectorCompanies owned and managed by public sector and private sector jointly 50

6. Foreign Governments and foreign banks 60Foreign Governments and Foreign banks having no branches in India(Foreign Governments for turn-key projects under buyers’ line of credit andForeign banks under agency arrangements)

95

Banking Statistics

LIST ‘D’

NATURE OF BORROWAL ACCOUNT

SerialNo.

Nature of Borrowal Account Code

1. Artisans/Craftsmen; Village/Cottage Industries; Tiny Industries 1

2. Other Small Scale Industries (registered as well as unregistered) 2

3. All Others 3

LIST ‘E’

ASSET CLASSIFICATION OF BORROWAL ACCOUNT

SerialNo.

Asset Classification of Borrowal Account Code

1. Standard Assets 1

2. Sub-standard Assets 2

3. Doubtful Assets 3

4. Loss Assets 4

LIST ‘F’

CLASSIFICATION OF ACTIVITY / OCCUPATION - SUMMARY

Division Description Range of Code

A: AGRICULTURE AND FORESTRY

01 Agriculture & Related Service Activities

Growing of Food and Cash Crops (excluding Plantation Crops) 01101 to 01119

Plantation Crops including Development Finance 01121 to 01129

Other Direct Finance to Agriculture - including fundsprovided directly to farmers 01151 to 01159

Indirect Finance to Agriculture 01182

Farming of Animals, Poultry, Silkworm etc. 01201 to 01209

Mixed Farming 01301

Agriculture and Animal Husbandry Services 01401 to 01409

02 Forestry, Logging & Related Service Activities

Forestry, logging & related service activities 02001

B: FISHING

05 Fishing, operation of fish hatcheries and Fish farms &Service activities incidental to fishing 05001

96


C : MINING AND QUARRYING

10 Mining of Coal and Lignite; Extraction of Peat 10001

11 Extraction of crude petroleum and natural gas & relatedService activities excluding surveying 11101 to 11201

12 Mining of Uranium and Thorium 12001

13 Mining of Metal Ores 13101 to 13201

14 Other Mining and Quarrying 14101 to 14203

D: MANUFACTURING

15 Manufacturing of food products and beverages 15101 to 15409

Manufacturing of Food products 15501 to 15502

Manufacture of Beverages 16001 to 16003

16 Manufacture of Tobacco Products 17101 to 17301

17 Manufacture of Textiles 18101 to 18201

18 Manufacture of Wearing apparel; dressing and dying of fur 19101 to 19102

19 Tanning and dressing of leather, manufacture of leather &leather products 19201 to 19202

Manufacture of Footwear

20 Manufacture of Wood and Products of wood and cork exceptfurniture 20101 to 20202

21 Manufacture of Paper and Paper products 21001 to 21004

22 Publishing, Printing and reproduction of recorded media 22101 to 22301

23 Manufacture of Coal products (coke), refined Petroleumproducts and Nuclear Fuels 23101 to 23301

24 Manufacture of Chemicals and Chemical products 24101 to 24301

25 Manufacture of Rubber and Plastic products 25101 to 25202

26 Manufacture of Other non-metallic mineral products 26101 to 26905

27 Manufacture of Basic metals 27101 to 27302

28 Manufacture of fabricated metal products, except machineryand equipments 28101 to 28901

29 Manufacture of Machinery and Equipments n.e.c. 29101 to 29301

30 Manufacture of Office, accounting and computing machinery 30001 to 30002

31 Manufacture of Electrical machinery and apparatus n.e.c. 31101 to 31901

32 Manufacture of Radio, Television and Communicationequipment and apparatus 32101 to 32301

33 Manufacture of Medical, precision and optical instruments,watches and clocks 33101 to 33301

34 Manufacture of Motor Vehicles, Trailers and Semi-Trailers 34101 to 34301

35 Manufacture of other Transport equipment 35101 to 35909

36 Manufacture of furniture; manufacturing n.e.c. 36101 to 36909

37 Recycling 37001


97

Banking Statistics

E : ELECTRICITY, GAS AND WATER SUPPLY

40 Electricity, Gas, Steam and Hot Water Supply 40101 to 40301

41 Collection, purification and distribution of water 41001

F: CONSTRUCTION

45 Construction

Construction other than Infrastructure 45001 to 45004

Infrastructure Construction 45011 to 45019

G: WHOLESALE AND RETAIL TRADE; REPAIR OF MOTORVEHICLES, MOTORCYCLES AND PERSONAL /HOUSEHOLD GOODS

50 Sale, Maintenance and Repair of Motor Vehicles andMotorcycles; Retail sale of Automotive Fuel 50001 to 50005

51 Wholesale Trade and Commission trade (except MotorVehicles and Motorcycles) 51101 to 51909

52 Retail Trade (except of Motor Vehicles and Motor Cycles);Repair of Personal / Household Goods 52101 to 52601

H: HOTELS AND RESTAURANTS

55 Hotels and Restaurants 55101 to 55201

I: TRANSPORT STORAGE AND COMMUNICATIONS

60 Land Transport; Transport via pipelines 60101 to 60301

61 Water Transport 61101 to 61202

62 Air Transport 62001 to 62101

63 Supporting and auxiliary transport activities, activities ofTravel agencies 63001 to 63019

64 Post and Telecommunications 64101 to 64202

J: FINANCIAL INTERMEDIATION

65 Financial Intermediation except Insurance and PensionFunding Banks 65101 to 65104

66 Co-operative Institutions and Land Development Banks 65901 to 65909

Non - Banking Financial Institutions/Companies 65911 to 65929

67 Other Financial Intermediation 65931 to 65939

68 Insurance and Pension Funding, except compulsorySocial Security 66001 to 66003

69 Activities auxiliary to Financial Intermediation 67101 to 67201

K: REAL ESTATE, RENTING AND BUSINESS ACTIVITIES

70 Real Estate Activities 70001

71 Renting of Machinery and Equipments 71101 to 71301

72 Computer and Related Activities 72101 to 72909

73 Research and Development 73001

74 Other Business activities 74101 to 74901


98


L: PUBLIC ADMINISTRATION AND DEFENCE;COMPULSORY SOCIAL SECURITY

75 Public Administration and Defence; CompulsorySocial Security 75001

M: EDUCATION

80 Education 80001 to 80003

N: HEALTH AND SOCIAL WORK

85 Medical, Health and Social work 85101 to 85301

O: OTHER COMMUNITY, SOCIAL AND PERSONALSERVICE ACTIVITIES

90 Sewage and Refuse Disposal, Sanitation & similar activities 90001

91 Activities of Membership organisation 91101 to 91901

92 Recreational, Cultural and Sporting activities 92101 to 92401

93 Other Service activities 93001 to 93002

94 Personal loans and Consumer loans 94001 to 94009

99 Miscellaneous 99999


99

Banking Statistics

Annex 2.4

CLASSIFICATION OF ACTIVITY/OCCUPATION

GroupSub- Code

DescriptionGroup No.

A. AGRICULTURE AND FORESTRY

Division 01: Agriculture & Related Service Activities

Growing of Food and Cash Crops (excluding Plantation Crops)

011 01 01101 Growing of cereals

011 02 01102 Growing of pulses

011 03 01103 Growing of oilseeds including peanuts or soya beans

011 04 01104 Growing of sugarcane or sugar beet

011 05 01105 Growing of cotton

011 06 01106 Growing of Jute, Mesta, Sun hemp or other kindred/ other vegetabletextile fibre plants (Includes growing of plant materials for plaiting,padding or stuffing or brushes or brooms)

011 07 01107 Growing of tobacco, including its preliminary processing in the farm

011 08 01108 Growing of vegetables (Olericulture), Including Singhara, Makhana, Chillesand Mushroom cultivation

011 09 01109 Growing of flowers (Floriculture), horticultural specialties and nurseryproducts

011 11 01111 Growing of plants used chiefly in pharmacy (medicinal plants) or forinsecticide, fungicidal or similar purposes ( Includes growing of opiumand ganja)

011 19 01119 Growing of other crops, n.e.c. (Includes growing of potatoes, jams, sweetpotatoes or cassava; hop cones, chicory roots or roots and tubers with ahigh starch or insulin content; growing of seeds of a kind used forsowing, growing of forage plants including grasses and of crops notelsewhere classified)

Plantation Crops including Development Finance

011 21 01121 Growing of tea or mate leaves by tea estates/gardens not having theirown processing units

011 22 01122 Growing and processing of tea or mate leaves by tea estates/gardenshaving their own processing and blending (including manufacture ofinstant tea) units. (Processing by independent units is classified under15406)

011 23 01123 Growing of coffee or cocoa beans

011 24 01124 Growing of rubber trees; harvesting of latex and treatment on theplantation of the liquid latex for the purpose of transport or preservation

011 25 01125 Growing of fruit crops including setting up and maintenance of orchard;activities incidental to growing of fruit crops

100


011 26 01126 Growing of edible nuts including coconuts

011 27 01127 Growing of spice crops including: spice leaves (e.g. bay, thyme, basil);spice seeds (e.g. anise, coriander, cumin); spice flowers (e.g. cinnamon);spice fruit (e.g. cloves); or other spices (e.g. nutmeg, ginger). Also includesgrowing of betel leaves

011 29 01129 Growing of any other plantation crops, n.e.c.

Other Direct Finance to Agriculture – include funds provided directly to farmers for

011 51 01151 Farm Machinery and implements: Purchase of tractors, harvester, Tranplanters, pump sets etc. Agricultural implements & tools, accessories

011 52 01152 Farm Transport Vehicles/accessories: Purchase of trucks, mini trucks,jeeps, pick up vans, trailers, semi-trailers, bullock cart and othertransport equipments etc. to assist the transport of agricultural inputsand farm products

011 53 01153 Soil/Land/Farm Development Activities such as levelling, bunding andreclamation of land, digging, repairs and cleaning of wells and ponds

011 54 01154 Farm Irrigation: Lift irrigation, sprinkler/drip irrigation, tube-wellirrigation, development of irrigation potentials (credit extended to State-sponsored minor irrigation/tube-well corporations should be includedhere)

011 55 01155 Construction of pump houses, cattle sheds, poultry sheds etc.

011 56 01156 Storage and marketing of Agriculture produce- including loans forconstruction and running of storage facilities (warehouses, godowns, silosand cold storages) in the producing areas

011 57 01157 Culturing micro-organism for agriculture related purpose, Bio-fertilizers,vermiculture etc.

011 59 01159 Any Other Direct Finance to Agriculture ( Financing through Kisan CreditCard should be coded according to the purpose of the loan )(Creditadvanced to Bio-gas plant should be indicated against Code 401104and not here)

Indirect Finance to Agriculture

011 82 01182 Indirect Finance to Agriculture Excluding the following categories

(Credit advanced to the following categories/agencies should be indicatedwith respective codes provided in brackets against them)

(1) Agriculture Custom Services Units (Code 01409)

(2) Loans to electricity boards for Energisation of pumpsets(Code 40102)

Annex 2.4 (Contd.)

GroupSub- Code


101

Banking Statistics

(3) Distribution of fertilizers and pesticides (Wholesale Code 51402)

(4) Distribution of fertilizers and pesticides (Retail sale Code 52301)

(5) Regional Rural Banks (RRBs) (Code 65102)

(6) PACS (Code 65901)

(7) FSS & LAMPS etc. (Code 65902)

(8) Co-operative Marketing Societies and Co-operatives of producers(code 65904)

(9) Land Development Banks-SLDBs and PLDBs (code 65905)

(10) Agricultural Finance Corporations (code 65931)

[Here only loan activity is classified. Subscription to bonds issued byREC, NABARD etc. and deposits held by banks in RIDF maintained byNABARD should be excluded as they are non-loan activity. For tabulation,the credit advanced to the categories mentioned above {except RRBs }will be grouped along with indirect finance to agriculture]

Farming of Animals, Poultry, Silkworms etc.

012 01 01201 Dairying: -Including Cattle (including yak and buffalo) breeding, rearingand ranching etc.; production of raw milk and bovine semen

012 02 01202 Rearing of goats, production of milk ; sheep, production of shorn wool;horses, camels, mules and other pack animals

012 03 01203 Raising of poultry (including broiler) and other domesticated birds;production of eggs and operation of poultry hatcheries

012 09 01209 Raising of pigs and swine; Farming of rabbits including angora rabbits;Raising of bees including production of honey; Raising of silk wormsincluding production of silk worm cocoons; sericultureOther animalfarming n.e.c. like raising in captivity of semi domesticated or wild liveanimals including birds and reptiles, operation of worm farms, landmollusc farms, frog farms etc.

Mixed farming

013 01 01301 Growing of crops combined with farming of animals (mixed farming).[This includes crop growing in combination with farming of animals suchas sheep or meat cattle at mixed activity units with specialisation ratioin either one of less than 66 percent. ( Mixed cropping or mixed livestockunits are classified according to their main activity)]

Agriculture and Animal Husbandry Services

014 01 01401 Cotton ginning, cleaning and bailing

014 02 01402 Biotechnology including tissue culture services related to Agriculture

Annex 2.4 (Contd.)

GroupSub- Code


102


014 09 01409 Agricultural Custom Service Units Providing Services for

Soil/Land operations machinery/equipments services (e.g. services oftractors for ploughing, harrowing etc., well boring equipment, threshers,combines etc. & operation of other agricultural equipments to farmerson contract basis)

Operation of irrigation systems

Soil conservation services, including soil testing and soil desalinationservices.

Activities relating to raising a crop, promoting its growth or protecting itfrom disease and insects (spraying operations etc.). Transplantation ofpaddy in paddy fields. Horticultural and nursery services.

Harvesting and activities related to harvesting, such as preparation ofcrop by cleaning, trimming, grading, drying, decorticating, retting, coolingor bulk packaging. Includes cotton picking (agro-based service centreslike grading of agricultural products etc.)

Animal husbandry service: Activities to promote propagation, growth andoutput of animals and to obtain animal products: artificial insemination,herd testing, poultry caponizing, coop cleaning, dung gathering etc. Sheepdipping and shearing, egg cleaning and grading, animal skinning andrelated activities. (Veterinary services to be coded under code 85201)

Other agricultural and animal husbandry service activities, n.e.c

Division 02: Forestry, Logging & Related Service Activities

020 01 02001 Forestry, Logging and related service activities:

Growing of standing timber: planting, replanting, transplanting, thinningand conserving of forests and timber tracts; Social Forestry; Operationof tree nurseries; Logging: logging camps and loggers primarily engagedin felling timber and producing wood in the rough form. Gathering oftendu leaves and other wild growing forest materials

Forestry service activities: timber cruising, timber evaluation, fire fightingand forest management including aforestation and reforestation; Loggingservice activities: transport of logs in association with logging chieflywithin the forest.

B. FISHING

Division 05: Fishing, operation of fish hatcheries and fish farm andService activitiesincidental to fishing

050 01 05001 Aquaculture, Fishing (including gathering of marine materials), operationof fish hatcheries and fish farms; service activities incidental to fishing

Annex 2.4 (Contd.)

GroupSub- Code


103

Banking Statistics

C. MINING AND QUARRYING

Division 10: Mining of Coal and Lignite; Extraction of Peat

100 01 10001 Mining and agglomeration of hard coal

Mining and agglomeration of hard lignite

Extraction and agglomeration of peat

Division 11: Extraction of crude petroleum and natural gas & related service activitiesExcluding surveying

111 01 11101 Extraction of crude petroleum and natural gas

112 01 11201 Service activities incidental to oil and gas extraction excluding surveying

Division 12: Mining of Uranium and Thorium

120 01 12001 Mining of uranium and thorium ores(e.g. pitchblende),includingconcentration of such ores

Division 13: Mining of Metal ores

131 01 13101 Mining of iron ores [includes mining of hematite, magnetite, limonite,siderite or taconite etc. which are valued for iron content. Production ofsintered iron ores is also included]

132 01 13201 Mining of non-ferrous metal ores n.e.c. - includes manganese ores,chromium ores; aluminum ores (bauxite); gold and silver ores; copperores; lead and zinc ores; titanium (ilmenite and rutile), niobium, tantalum,vanadium or zirconium ores; tin bearing ores; nickel, cobalt, tungsten,molybdenum, antimony and other non-ferrous metal ores)

Division 14: Other Mining and Quarrying

141 01 14101 Mining & Quarrying of stone (rock aggregates), sand, clays and otherminerals for construction [includes quarrying of marble, granite; slateand other building and monumental stone; dolomite; gypsum includingselenite; Operation of sand and gravel pits, basalt/porphry, clay](ordinary), crushing & breaking of stone for use as a flux or raw materialin lime or cement manufacture or as building material, road metal orballast and other materials for construction;

Mining/quarrying of limestone, limeshell, ‘kankar’ and other calcareousminerals including calcite, chalk and shale; mining of clays (kaoline,ball clay, bentonite, fuller’s earth, fire clay etc.); mining of refractorynon-clay minerals (andalusite, kyanite, sillimanite, dunite, diaspore,magnesite etc.)

Annex 2.4 (Contd.)

GroupSub- Code


104


142 01 14201 Mining of chemicals and fertilizers [includes mining of native sulphur orpyrite and pyrrhotites valued chiefly for sulphur; natural phosphateincluding apatite minerals; earth colours (ochre including red oxide);fluorspar, barytes; potash bearings salt / minerals; borate minerals andother fertilizer and chemical minerals]

142 02 14202 Extraction of Salt [ includes salt mining, crushing and screening andsalt production by solar evaporation of sea water, lake brine or othernatural brines.]

142 03 14203 Other Mining and quarrying n.e.c. [includes mining of precious stones(agate, diamond, emerald, garnet (gem), jasper, ruby/sapphire etc.);abrasive materials (pumice stone, emery, corundum, farnet etc.); mica;natural graphite; asbestos; vermiculites, perlite and chlorites; felsparand silica minerals including quartz, quartzite and fuch. quartzite; talc/steatite; laterite, diatomite and silicious fossil metals; and other naturalfluxes; natural asphalt or bitumen and other mining n.e.c.]

D. MANUFACTURING

Division 15: Manufacturing of food products and beverages

Manufacturing of food products

151 01 15101 MEAT: Slaughtering, preparation and preservation of meat [includesMutton, Beef, Pork, Poultry and other slaughtering; processing andcanning of meat; Rendering and refining of lard and other edible animalfat; Production of flours and meals of meat and meat offals]

151 02 15102 FISH: Processing, canning, freezing and preserving of fish, crustaceanand similar foods [includes sun drying, artificial dehydration, radiationpreservation of fish, sea food and similar food; manufacture of fish meal;processing & canning of froglegs etc.]

151 03 15103 FRUITS & VEGETABLES: Processing, canning and preserving of fruitsand vegetables [includes sun drying, artificial dehydration, radiationpreservation; manufacture of fruit/vegetable juices, concentrates,squashes and powder; manufacture of sauces, jams, jellies, marmalades;pickles, chutneys, murabbas etc.; potato flour & meal and preparedmeals of vegetables]

151 04 15104 OILS & FATS: Manufacture of vegetable and animal oils and fats [includesmanufacture of hydrogenated oils, vanaspati, ghee and other edible oilsand fats such as mustard oil, cotton seed oil, sesame & sunflower oil,soyabean oil, coconut & groundnut oil, fish oil,animal oils and fats etc.;manufacture of cakes & meals incl. residual products, e.g. Oleostearin,Palmstearin; manufacture of non-deflated flour or meals of oilseeds,oilnuts or kernels] {Non-edible oils are to be shown under the code242.12}

Annex 2.4 (Contd.)

GroupSub- Code


105

Banking Statistics

152 01 15201 DAIRY PRODUCTS: Manufacture of dairy products [includes milk powder,ice-cream powder, condensed milk, baby milk foods, butter, ghee, cream,cheese, khoya etc.; manufacture of pasteurised milk (plain or flavored);Manufacture of ice-cream, kulfi and other dairy products] includingchilling of milk.

153 01 15301 GRAIN MILL PRODUCTS: Manufacture of grain mill products [ includesFlour, Rice and Dal milling; husking of paddy, flour chakkies; processingand grinding of grains; vegetable milling, flour or meal of driedleguminous vegetables of roots or tubers or of edible nuts; manufactureof breakfast foods obtained by roasting or swelling cereal grains;manufacture of prepared, blended flour and dough for bread, cake, etc.]

153 02 15302 STARCH AND STARCH PRODUCTS: Manufacture of starches and starchproduct [ includes sago and sago products; glucose & glucose syrup,maltose, gluten, tapioca substitutes prepared from starch, corn oil etc.]

ANIMAL FEED: Manufacture of prepared animal feeds [includes cattlefeed, poultry feed and other animal and bird feed]

154 01 15401 Manufacture of confectionery product, bakery products, biscuits, cakes,pastries, confectionery products and other bakery products

154 02 15402 Manufacture and refining of sugar & sugar products (vacuum pan sugarfactories) and by-products including manufacture of molasses

154 03 15403 Manufacture of indigenous sugar, ‘Boora’, ‘Gur’ and ‘Khandsari’ fromsugarcane or other than sugar cane, candy and indigenous sugarcane/sugarbeet/palm juice products etc.

154 04 15404 Manufacture of cocoa, chocolate and sugar confectionery includingmanufacture of sweetmeats, chewing gum and preservation in sugar offruits, nuts, fruit peals and other part of plants

154 05 15405 Manufacture of semi-processed and ready to eat food items like macaroni,noodles, corn-flakes, and other similar products

154 06 15406 Tea processing and blending(including manufacturing of instant tea) unitswhich do not have their own tea gardens/estates

154 07 15407 Coffee curing, roasting , grinding and blending etc. including manufactureof instant coffee, chicory and other coffee substitutes, essence ofconcentrates of coffee

154 08 15408 Processing of edible nuts

154 09 15409 Manufacture of all other food products n.e.c. like grinding and processingof spices; papads, appalam and similar products; vitaminised high proteinflour, frying of dals & other cereals incl. roasting of nuts; egg powder,sambar powder etc.; malted foods, common salt, table/iodised salt, etc.

Annex 2.4 (Contd.)

GroupSub- Code


106


Manufacture of Beverages

155 01 15501 Distilling, rectifying and blending of spirits; ethyl alcohol production fromfermented materials; manufacture of country liquor

Manufacture of wines including fenny

Manufacture of malt liquors (beer etc.); manufacture of malt

155 02 15502 Manufacture of soft drinks (aerated drinks, synthetic flavored concentratesand syrups etc.); mineral water; ice and other beverages n.e.c.

Division 16: Manufacture of Tobacco Products

160 01 16001 Tobacco processing [includes stemming, redrying etc. of tobacco leaves]

160 02 16002 Manufacturing of tobacco products [includes manufacture of bidi,cigarette and cigarette tobacco, cigars and cheroots, snuff, ‘zarda’, chewingtobacco, ‘gutka’ and other tobacco products]

160 03 16003 Manufacture of chewing items like pan masala, scented supari, catechu(kattha), chewing lime and related products (not containing tobacco ortobacco products)

Division 17: Manufacture of Textiles

171 01 17101 COTTON TEXTILE: Preparation and spinning of cotton fibre includingblended cotton; Weaving, manufacture of cotton and cotton mixture fabric[Blended yarn/fabric means, yarn or fabrics containing more than 50%of one fibre]; Finishing of cotton and blended cotton textiles [finishingincludes operations such as bleaching, dyeing, calendaring, napping,shrinking, and printing etc.]

171 02 17102 JUTE & OTHER NATURAL FIBRE TEXTILE: Preparation, pressing, bailing,spinning and weaving of jute, mesta, hemp and other natural fibreincluding blended natural fibres; Finishing of jute, mesta and othervegetable textiles fabrics [bleaching, dyeing and printing of jute, mesta,hemp and other vegetable textile]

171 03 17103 SILK & SYNTHETIC TEXTILE: Preparation and spinning of silk andsynthetic (man-made) fibres (rayon, nylon, terene, artsilk etc.) includingblended silk or synthetic fibre; Weaving, manufacturing of silk orsynthetic fibre and silk or synthetic mixture fabrics; Finishing of silk orsynthetic and blended silk or synthetic textiles

171 04 17104 WOOLEN TEXTILE: Preparation (cleaning, bailing, and processing) andspinning of wool, including other animal hair and blended wool includinganimal hair; Weaving, manufacturing of wool and wool mixture fabrics;Finishing of wool and blended wool textiles

171 05 17105 Handloom textiles and Khadi (spinning weaving dyeing, printing, etc.)

Annex 2.4 (Contd.)

GroupSub- Code


107

Banking Statistics

172 01 17201 Manufacture of made-up textile articles, except apparel such as curtains,bed covers, upholstery, bedding, quilts, pillows, cushions and sleepingbags, mosquito nets etc.; Manufacture of tarpaulin

172 02 17202 Manufacture of jute, mesta, hemp and other vegetable fibre productssuch as ropes, cordage, twine, etc.(excluding coir)

172 03 17203 Coir and coir products including coir fibre and yarn matting etc.

172 04 17204 Manufacture of shawls, blankets, carpets, durries, druggets and rugs

172 05 17205 Manufacture of thread, including thread ball making, manufacture ofnets (excluding mosquito nets); Manufacture of tapes, newar and wicks;manufacture of ropes and cordage other than jute/mesta/hemp andcoir

172 09 17209 Embroidery work, making of laces and fringes; Zari and zari work; makingof ornamental trimmings; manufacture of gas mantles; manufacture ofwadding of textile materials and articles of wadding such as sanitarytowels and tampons; manufacture of made-up canvas goods such astents and sails etc.; manufacture of metallised yarn or gimped yarn;manufacture of waterproof textiles excluding tarpaulin; other textileproducts not elsewhere classified

173 01 17301 Manufacture of knitted and crocheted fabrics and articles – cotton,woolen, synthetic etc. textile products

Division 18: Manufacture of Wearing apparel; dressing and dyeing of fur

181 01 18101 Manufacture of wearing apparels, ready made garments (except Khadi)

181 02 18102 Manufacture of Khadi Garments

182 01 18201 Dressing (includes scraping, curing, tanning, bleaching) and dyeing offur; manufacture of articles of fur and pelt products; Embroidering andembossing of leather articles

Division 19: Tanning and dressing of leather, manufacture of leather & leather products

191 01 19101 Tanning, Curing, finishing, embossing, japanning and dressing of leather:includes flaying and curing of raw hides and skins, tanning and finishingof sole and industrial leather, vegetable / chrome tanning of leather

191 02 19102 Manufacture of leather and leather products (excluding footwear) likesuitcases, handbag, saddlery, harness etc.

Manufacture of footwear

192 01 19201 Manufacture of leather footwear: includes manufacture of leather shoes,leather sandals and chappals, leather-cum-rubber/plastic cloth sandalsand chappals made by hand or by any process

Annex 2.4 (Contd.)

GroupSub- Code


108


192 02 19202 Manufacture of all other types of footwear: includes manufacture offootwear made primarily of vulcanized or moulded rubber and plastic,manufacture of rubber footwear, plastic & PVC, canvas-cum-rubber/plastic footwear etc. including sports footwear.

Division 20: Manufacture of wood and products of wood and cork except furniture

201 01 20101 Saw milling and planking of wood (other than plywood); Manufacture ofunassembled wood flooring, including parquet flooring; Manufacture ofrailway sleepers

202 01 20201 Manufacture of veneer sheets; manufacture of plywood, laminated board,particle board and other panels and boards

202 02 20202 Manufacture of builders’ carpentry and joinery: Manufacture of structuralwooden goods (including treated timber) such as beams, posts, doorsand windows (excluding hewing and rough shaping of poles, bolts andother wood material which are classified under logging); Manufacture ofprefabricated buildings predominantly of wood.

Manufacturing of wooden containers- wooden boxes, barrels etc. (exceptplywood), plywood chests, market basketry, grain storage bins, rationbaskets and similar products made from bamboo and reed etc., otherwooden containers and products made entirely or mainly of cane, rattan,bamboo, willow, fibres, leaves and grass

Manufacture of other products of wood, manufacture of articles of cork,straw and plaiting materials

Division 21: Manufacture of Paper and Paper products

210 01 21001 Manufacture of pulp, paper and paper boards (includes printing andwriting paper, packaging paper, paper board, straw board, hard board,special purpose paper/paper products for computers] except newsprint.

210 02 21002 Manufacture of newsprint

210 03 21003 Manufacture of corrugated paper and paper board and of containers ofpaper and paper board [includes sacks and paper bags, card boardboxes etc.); Manufacture of craft paper

210 04 21004 Manufacture of other articles of paper and paper board like paper hoopsand cones, paper cups, saucers, plates and other similar products;manufacture of dolls from pulp, papier mache articles, wall paper, filecover/file board, similar articles; carbon paper & stationery items etc.

Division 22: Publishing, Printing and reproduction of recorded media

221 01 22101 Publishing of books, brochure, musical books and other publications

221 02 22102 Publishing of newspaper, periodicals and journals

Annex 2.4 (Contd.)

GroupSub- Code


109

Banking Statistics

221 03 22103 Publishing of recorded media [includes publishing of records and otherrecorded audio media]

222 01 22201 Printing of newspapers, magazines, periodicals, journals and othermaterial and allied activities n.e.c.

Service activities related to printing like engraving, etching, bookbinding,block making etc.

223 01 22301 Reproduction of recorded media

Division 23: Manufacture of Coal products/coke, refined petroleum products andNuclear Fuels

231 01 23101 Manufacture of coke or coke oven products [includes the operation ofcoke ovens chiefly for the production of coke or semi-coke from hardcoal and lignite, retort carbon and residual products such as coal tar orpitch, coal gas, naphthaline etc.), Agglomeration of coke.

232 01 23201 Manufacture of refined petroleum products

233 01 23301 Processing of nuclear fuel

Division 24: Manufacture of Chemicals and Chemical products

241 01 24101 Manufacture of basic chemicals except fertilizers and nitrogen compounds(Heavy industry organic or inorganic chemicals and gases)

241 02 24102 Manufacture of turpentine and resins of vegetable origin

241 03 24103 Manufacture of fertilizers and nitrogen compounds

241 04 24104 Manufacture of plastic in primary form and of synthetic rubber : includesmanufacture of synthetic rubber, amino-resins, phenolic-resins,polyurethane, cellulose and its chemical derivatives, natural polymersand modified natural polymer, other plastics in primary forms (includingmixtures of synthetic rubber and natural rubber or rubber like gum e.g.balata) in primary forms

242 01 24201 Manufacture of pesticides and other agro chemical products

242 02 24202 Manufacture of paints, varnishes and similar coatings, printing ink andmastics

242 03 24203 Manufacture of pharmaceuticals, medicinal chemicals and botanicalproducts (including ‘Ayurvedic’, Homeopathic and ‘Unani’ pharmaceuticalpreparations, Veterinary preparations, Surgical dressings)

Annex 2.4 (Contd.)

GroupSub- Code


110


242 04 24204 Manufacture of soaps of all type, waxes & polishes, organic surface-active agents (surfactants) and preparations based thereon, detergents,auxiliary washing and cleaning preparations, perfumes, cologne,preparations for dental hygiene (toothpastes, toothpowder etc.), cosmeticsand toiletries (pre-shave, shaving or after shave preparations, anti-respirants etc.), hair oil, shampoo, hair dye and other toilet preparations;Manufacture of agarbatti and other odoriferous preparations whichoperate by burning

242 11 24211 Manufacture of Matches & fireworks, explosives, ammunitions

242 12 24212 Non-edible oils: Manufacture of essential oils, modification by chemicalprocesses (e.g. by oxidation, polymerization etc.) of oils and fats

242 13 24213 Manufacture of photochemical, sensitised films and papers

242 14 24214 Manufacture of gelatin and gelatin derivatives, glues of animal origin,prepared glues and other prepared glues and other prepared adhesivesincluding adhesives based on rubber or plastics

242 19 24219 Manufacture of fine chemicals and other chemical products n.e.c.(including anti-knock preparations, anti-freeze preparations, liquids forhydraulic transmission, composite diagnostic or laboratory reagents,writing or drawing ink, processed salt (except table salt) and otherchemical products)

243 01 24301 Manufacture of man-made fibres [This class includes manufacture ofartificial or synthetic filament and non-filament fibres.]

Division 25: Manufacture of Rubber and Plastic products

251 01 25101 Manufacture of rubber tyres, tubes; Retarding of tyres; replacing ofpneumatic tyres and solid or cushion tyre, tyre parts suchinterchangeable tyre treads or tyre flaps; ‘camel-back’ strips for re-tardingtyres and tyres and tubes etc.

251 02 25102 Manufacture of other rubber products like rubber plates, sheets, strips,rods, tubes, pipes, hoses and profile-shapes etc.; Manufacture of rubberconveyor or transmission belts or belting; manufacture of rubbercontraceptives, balloons, hot water bags etc.; rubber products andcomponents for industrial use (excluding oil cloth and rubberised cloth)

252 01 25201 Manufacture of plastic products - includes manufacture of semi-finishedproducts, packing products, bathing tubs, wash-basins, lavatory pans andcovers, flushing cisterns and similar sanitary-ware, travel goods (suitcases,vanity bags, holdalls and similar articles), spectacle frames, mouldedindustrial accessories [including electrical insulating fittings of plastics],tableware, kitchenware and other household and toilet articles of plastic;vacuum flasks and other vacuum vessels, plastic headgears etc.

252 02 25202 Manufacture of fibre glass and products

Annex 2.4 (Contd.)

GroupSub- Code


111

Banking Statistics

Division 26: Manufacture of Other non-metallic mineral products

261 01 26101 Manufacture of glass and glass products including glass fibre, float glassand products

269 01 26901 Manufacture of non-structural non-refractory ceramic ware - includesarticles of porcelain or china, earthenware, imitation porcelain or commonpottery, including earthen statues, statues and ornamental articles ofstone and other stoneware, ceramic tableware and other articles usedfor domestic purposes, including ceramic statuettes and other ornamentalarticles, ceramic sanitary wares, ceramic insulators and insulating fittingsfor electrical etc.

Manufacture of refractory ceramic products like refractory bricks, blocktiles and similar refractory ceramic constructional goods; Manufactureof refractory cements; ceramic products that are used in metallurgicaloperations; retorts, crucibles, muffles, nozzles, tubes, pipes etc.

Manufacture of structural non-refractory clay and ceramic products -includes bricks, non-refractory ceramic pipes, conduits, guttering andpipe fittings, ceramic building material, other than bricks: flooring blocks,roofing tiles, wall tiles , flags and pavings, mosaic cubes etc.

269 02 26902 Manufacture of cement, lime and plaster

269 03 26903 Manufacture of articles of concrete, cement and plaster including asbestoscement and its products, hume pipes etc.

269 04 26904 Cutting, shaping and finishing of stone [includes cutting, shaping andfinishing stone for use in construction, in cemeteries, on roads, as roofingand in other applications]

269 05 26905 Manufacture of mica and mica products; gypsum boards; millstones,sharpening or polishing stones and natural or artificial abrasive products;graphite products other than electrical articles; asbestos yarn and fabric;mineral insulating material (slag wool, rock wool, exfoliated vermiculite,expanded clays etc.); products of glass wool for heat—insulating; articlesof asphalt

Division 27: Manufacture of Basic Metals

271 01 27101 Manufacture of Basic Iron & Steel (smelting, rolling, re-rolling, cold rolling,wire drawing etc.)- includes manufacture of ferro alloys, Direct ReducedIron (DRI)/ Sponge Iron ,Pig Iron (hot metal), non-alloy steel primary/semi finished/finished long/flat products; Manufacture of alloy steel ;Manufacture of stainless steel (primary, semi-finished, finished stainlesssteel products).

272 01 27201 Manufacture of basic precious and non-ferrous metals like copper,aluminum, zinc, brass etc.(smelting, rolling, re-rolling, cold rolling, wiredrawing etc.)

273 01 27301 Casting of iron and steel

273 02 27302 Casting of non-ferrous metals

Annex 2.4 (Contd.)

GroupSub- Code


112


Division 28: Manufacture of fabricated Metal products, except machinery and equipments

281 01 28101 Manufacture of structural metal products

Manufacture of tanks, reservoirs and containers of metal [includesmanufacture of containers of metal for compressed or liquefied gas. Alsoincludes manufacture of central heating boilers and radiators.Manufacture of reservoirs, tanks and similar containers of types normallyinstalled as fixtures for storage or manufacturing use of metal, closures,or lined with materials other than iron, steel or aluminum

Manufacture of steam generators, except central heating hot water boilers

289 01 28901 Forging, pressing, stamping and roll-forming of metal; powder metallurgy

Treatment and coating of metals; general mechanical engineering on afee or contract basis

Manufacture of cutlery, hand tools, small tools, general and domestichardware

Manufacture of other fabricated metal products n.e.c. (excludingmachinery and transport)

Division 29: Manufacture of Machinery and Equipments N.E.C.

291 01 29101 Manufacture of engines and turbines (except aircraft, vehicle and cycleengines) its parts and accessories

Manufacture of pumps, compressors, Industrial taps and valves

Manufacture of bearings, gears, gearing and driving elements;

Manufacture of ovens, furnaces and furnace burners, mechanical stokers,mechanical grates, mechanical ash dischargers and similar appliances;

Manufacture of lifting and handling equipment, lifts, elevators, liquidelevators, conveyors, teleferics etc.

291 09 29109 Manufacture of refrigerators or freezing equipment & furniture designedto accommodate it; fire extinguishers, equipment for projecting, dispersingor spraying liquids or powders, centrifuges machinery for liquids andgases other than cream separators or clothes dryers, packing andwrapping machinery, weighing machinery, filtering and purifyingmachinery or apparatus for liquids and gases;

Manufacture of distilling and rectifying plants; heat exchangers;machinery for liquefying air or gas; producer gas or water gas andacetylene gas generators; Other general purpose machinery n.e.c.including parts & accessories

292 01 29201 Manufacture of tractors, harvesters and other heavy machinery for usein agricultural and forestry

292 02 29202 Manufacture of machine-tools

Annex 2.4 (Contd.)

GroupSub- Code


113

Banking Statistics

292 03 29203 Manufacture of machinery (and parts) for mining, quarrying andconstruction

292 04 29204 Manufacture of machinery for food (including rice, sugar, flour mill etc.),beverage (tea, coffee machinery etc.) and tobacco processing

292 05 29205 Manufacture of machinery for textile, apparel and leather production

292 06 29206 Manufacture of light agricultural and forestry machinery and equipmentincluding forage press: ploughs, harrows, weeders, hoes, seeders, manurespreaders, thinners etc.; Manufacture of parts and accessories foragricultural and forestry machinery and equipment; Manufacture of othermachinery and equipment for use in agriculture, horticulture or forestry,bee-keeping and fodder preparation (manufacture of hand tools used inagriculture, horticulture and forestry is classified in code 28901).

292 07 29207 Manufacture of machinery for metallurgy: converters, ingot moulds, ladlesand casting machines; metal rolling mills and rolls for such mills.

292 08 29208 Manufacture of weapons and ammunition

292 09 29209 Manufacture of other special purpose machinery n.e.c. including parts& accessories

293 01 29301 MANUFACTURE OF DOMESTIC APPLIANCES, N.E.C. - includes oil stoves,hurricane lanterns and oil pressure lamps, gas stoves, cooking rangesand other similar appliances, electric fans, vacuum cleaners and otherelectro-mechanical domestic appliances with self-contained electricmotors, such as food processors and juice extractors etc., domesticrefrigerators/freezers & air-conditioners,, Manufacturing of items basedon solar energy like solar cookers, air/water heating system etc. exceptcells.; electro-thermic domestic appliances such as immersion waterheaters, hot-plates, geysers ; electro-thermic hair dressing appliances;electric irons and electric/electronic cooking appliances (ovens, microwaveovens, cookers, hot plates, toasters, coffee or tea makers etc.); electricdishwashers, household type laundry equipment, electric razors includingparts and accessories for electrical domestic appliances; part andaccessories for electrical and non-electric domestic appliances

Division 30: Manufacture of Office, accounting and computing machinery

300 01 30001 Manufacture of computer, printers and other computer peripherals,automatic data processing machines and other computing machineryetc. including parts & accessories

300 02 30002 Manufacture of office, accounting and computing machinery [manual orelectric or electronic typewriters, hectograph or stencil duplicatingmachines, addressing machines, printing machines, calculating machines;other calculators; accounting machines, cash registers, postage frankingmachines, ticket issuing machines and similar machines incorporatinga calculating device; photo-copying apparatus, etc.]

Annex 2.4 (Contd.)

GroupSub- Code


114


Division 31: Manufacture of Electrical machinery and apparatus n.e.c

311 01 31101 Manufacture of electric motors, generators and transformers

312 01 31201 Manufacture of electricity distribution and control apparatus [electricalapparatus for switching or protecting electrical circuits (e.g. switches,fuses, etc.); boards, panels, consoles, cabinets and other bases equippedwith two or more of the above apparatus for electricity control ordistribution of electricity including power capacitors]

313 01 31301 Manufacture of insulated wire and cable [insulated (including enamelledor anodized) wire, cable (including COAXIAL CABLE) and other insulatedconductors; insulated strip as is used in large capacity machines orcontrol equipment; and OPTICAL FIBRE CABLES]

314 01 31401 Manufacture of accumulators, primary cells and primary batteries

315 01 31501 Manufacture of electric lamps and lighting equipment

319 01 31901 Manufacture of other electrical equipment n.e.c.

Division 32: Manufacture of Radio, Television and Communication equipment and apparatus

321 01 32101 Manufacture of electronic valves and tubes and other electroniccomponents; All type of electronic goods and components n.e.c.

322 01 32201 Manufacture of television and radio transmitters and apparatus for linetelephony and line telegraphy; Manufacture of related specialised partsand accessories

323 01 32301 Manufacture of television and radio receivers, sound or video recordingor reproducing apparatus, and associated goods; Manufacture of relatedspecialised parts and accessories

Division 33: Manufacture of Medical, precision and optical instruments, watches and clocks

331 01 33101 Manufacture of medical and surgical equipment and orthopedicappliances

Manufacture of instruments and appliances for measuring, checking,testing, navigating and other purposes except industrial process controlequipment

Manufacture of industrial process control equipment [apparatus usedfor automatic continuous measurement and control of variables such astemperature, pressure, viscosity and the like of materials or products asthey are being manufactured or otherwise processed]

332 01 33201 Manufacture of optical instruments and photographic equipment

333 01 33301 Manufacture of watches and clocks

Annex 2.4 (Contd.)

GroupSub- Code


115

Banking Statistics

Division 34: Manufacture of Motor Vehicles, Trailers and Semi-Trailers

341 01 34101 Manufacture of motor vehicles - including passenger and commercialvehicles like motor cars, jeeps, station wagon, ordinary and specialpurpose lorries, trucks and goods vans; lorries with automatic dischargingdevices, tankers, drop frame lorries, refuse collectors, etc. ; also includedover-the-road tractors for semi-trailers

342 01 34201 Manufacture of bodies (coach work) for motor vehicles; manufacture oftrailers and semi-trailers; manufacture of containers for transport ofgoods by transport

343 01 34301 Manufacture of parts and accessories for motor vehicles and their engines[brakes, gear boxes, axles, road wheels, suspension shock absorbers,radiators, silencers, exhaust pipes, clutches, steering wheels, steeringcolumns and steering boxes and other parts and accessories n.e.c.]

Division 35: Manufacture of other transport equipment

351 01 35101 Building and repairing of ships and fishing trawlers [This class includesship building and repairing (includes yachts and other vessels for pleasureor sports) and the construction and repair of floating structures, whetheror not used in freight/passenger carriage, and ship breaking]

352 01 35201 Manufacture of railway and tramway locomotives and rolling stock;Manufacture of parts and accessories is also included here

353 01 35301 Manufacture of aircraft and spacecraft - including flying balloons, gliders,hang gliders and other non-powered aircraft; Manufacture of parts andaccessories is also included here

359 01 35901 Manufacture of motorcycles, mopeds, scooters, scooterettes, auto-rickshaws, tempos (three-wheelers) and cycles fitted with an auxiliaryengine, whether or not with an attached side car; Manufacture of engines,side cars and other specialized parts and accessories for motor cycles,scooters and three-wheelers

359 09 35909 Manufacture of bicycles (including racing bicycles and children’s bicycles),cycle rickshaws and invalid carriages whether or not motorized orotherwise mechanically propelled; Manufacture of parts and accessoriesfor bicycles, cycle-rickshaws and invalid carriages

Manufacture of bullock-carts, pushcarts, tongas and hand-carts etc. ;Manufacture of other transport equipment n.e.c., including trolleys ofvarious sorts, including those specialized for particular industries

Division 36: Manufacture of furniture; manufacturing n.e.c.

361 01 36101 Manufacture of furniture & fixtures made of wood, cane, reed metal,plastic, etc.

Annex 2.4 (Contd.)

GroupSub- Code


116


369 01 36901 Manufacture of jewellery & related articles (of precious metal andgemstones other than diamond) and minting of currency coins

369 02 36902 Diamond cutting and polishing

369 03 36903 Manufacture of musical instruments

369 04 36904 Manufacture of sports and athletic goods

369 05 36905 Manufacture of games and toys

369 06 36906 Manufacture of stationery articles like pens, pencils, pencil leads, penrefills, date sealing or numbering stamps, typewriter ribbons, inked padsetc.

369 07 36907 Manufacture of imitation jewelry, brooms and brushes; floor sweepers,mops; feather dusters; paint pads and rollers etc.; umbrellas, sunumbrellas, walking sticks, seat sticks, whips, riding crops, buttons, pressfasteners, snap fasteners, press studs and slide fasteners; articles ofpersonal use: smoking pipes; combs, hair slides and similar articles;cigarette lighters; vacuum flasks and other vacuum vessels for householduse; articles of human hair and other articles of personal use n.e.c.;

369 09 36909 Manufacture of linoleum and hard surface floor coverings; Manufactureof miscellaneous decorative articles .n.e.c.: articles made from ivory, bonesand horns; artificial flowers; and other novelties and presentation articlesn.e.c.; Making of candles, tapers and the similar products of wax; Allother products n.e.c.

Division 37: Recycling

370 01 37001 Recycling of metal waste and scrap

Recycling of non-metal waste and scrap

E. ELECTRICITY, GAS AND WATER SUPPLY

Division 40: Electricity, Gas, Steam and Hot Water Supply

401 01 40101 Generation of electricity: hydro-electric power plants , coal based thermalpower plants, oil-based thermal power plants, atomic reactor power plantsand other power plants using conventional fuels (e.g. gas based)

Transmission of electricity generated from conventional sources [hydro-electric power plants , coal based thermal power plants, oil-based thermalpower plants, atomic reactor power plants and other power plants usingconventional fuels (e.g. gas based)]

401 02 40102 Energisation of pumpsets/wells (advances granted to State ElectricityBoards for energisation of pumpsets/wells)

Annex 2.4 (Contd.)

GroupSub- Code


117

Banking Statistics

401 03 40103 Collection and distribution of electric energy to households, industrial,commercial and other users

401 04 40104 Generation and distribution of bio-gas energy

401 05 40105 Generation and distribution of Solar energy and other non-conventionalsources (wind mills etc.)

402 01 40201 Manufacture of gas; distribution of gaseous fuels through mains

403 01 40301 Steam and hot water supply

Division 41: Collection, purification and distribution of water

410 01 41001 Collection, Purification and distribution of water

F. CONSTRUCTION

Division 45: Construction

[Loans given to borrowers whose main occupation is construction and maintenanceof activities listed below]

Construction other than infrastructure

450 01 45001 GENERAL CONSTRUCTION (including alteration, addition, repair andmaintenance) of residential buildings or non-residential buildings carried-out on own-account basis (as in the case of construction of buildingsby a builder for sale/lease) or on a fee or contract basis;

450 02 45002 SPECIALISED CONSTRUCTION [includes construction and maintenanceof sports stadia and OTHER CONSTRUCTION not elsewhere classifiedand special trade construction such as foundation work, water welldrilling scaffolding etc.]; Construction and maintenance of industrialplants other than power plants

[Loans given to borrowers for construction of house for own use is to beshown under housing loans. Loans extended to borrowers for constructionof shops, factories, staff quarters, office building etc. should be classifiedas per the borrowers main activity.]

450 03 45003 Loan for Setting up of industrial estates

450 04 45004 Building installation and Building completion (CONSTRUCTIONCONTRACTORS)

Building installation [These activities are usually performed at the siteof construction, although parts of the job may be carried out in a specialshop. Repair of installations are also included.] e.g. Plumbing anddrainage, Installation of heating and air-conditioning systems, antennas,elevators and escalators; insulation work (water, heat, sound); and soundproofing systems, Electrical installation work for constructions, etc.

Annex 2.4 (Contd.)

GroupSub- Code


118


Building completion [ Includes activities that contribute to the completionor finishing of a construction. Repairs of the same type are also included]

Infrastructure Construction

450 11 45011 Power - Construction/erection and maintenance of power andtransmission lines; hydro-electric projects, power plants, other thanhydro-electric power plants.

450 12 45012 Telecommunications - Construction/erection and maintenance oftelecommunication and transmission lines; telecom projects.

450 13 45013 Roads & Ports - includes construction and maintenance of roads, rail-beds, bridges, tunnels, pipelines, rope-ways, ports, harbours and runwaysetc. ; Construction and maintenance of waterways

450 19 45019 Other Infrastructure Construction n.e.c. like Construction andmaintenance water reservoirs, irrigation channels etc.

G. WHOLESALE AND RETAIL TRADE; REPAIR OF MOTOR VEHICLES, MOTORCYCLES ANDPERSONAL / HOUSEHOLD GOODS

Division 50: Sale, Maintenance and Repair of Motor Vehicles and Motorcycles;Retail Sale of Automotive Fuel

500 01 50001 Sale of all kinds of Motor vehicles [Includes wholesale and retail sale ofnew and used passenger motor vehicles and lorries, trailers and semitrailers; Two-wheelers (Motorcycles, scooter etc.) and Three-wheelers (autorickshaws etc.)]

500 02 50002 Sale of all kinds of parts and accessories of motor vehicles, Two- andThree-wheelers. [includes wholesale & retail sale of all kinds of parts,components, and accessories for motor vehicles, two- and three-wheelers,when not combined with sale of such vehicles themselves.];

500 03 50003 Maintenance and repair of motor vehicles, two- and three-wheelers[including washing and polishing etc.]

500 05 50005 Retail sale of automotive fuel [ includes the activity of petrol fillingstations. This activity is often combined with sales of lubricating products,cleaning and all other kinds of products for motor vehicles. If the mainobject, however, is the sale of automotive fuel or lubricants, they remainclassified here.]

Division 51: Wholesale Trade and Commission trade (Except of Motor Vehiclesand Motorcycles)

511 01 51101 Wholesale on a fee or contract basis. [Includes commission agents,commodity brokers and auctioneers and all other wholesalers who tradeon behalf and on the account of others]

Annex 2.4 (Contd.)

GroupSub- Code


119

Banking Statistics

512 01 51201 Food Procurement

512 02 51202 Food grains (cereals and pulses)

512 03 51203 Tobacco & Tobacco products.

512 04 51204 Food and beverages [includes wholesale of fruits and vegetables, dairyproducts, eggs & edible oils & fats, meat, fishery products, sugar,confectionery & bakery products, beverages, coffee, tea, cocoa and spices,etc.]

512 05 51205 Seeds (including cotton and oil seeds), agricultural raw material & liveanimals

513 01 51301 Diamonds, Gems and Jewelry

513 02 51302 Pharmaceutical and medical goods;

513 03 51303 Textiles, clothing and footwear and other household goods like toiletry,perfumery, cosmetics, metal, porcelain & glass utensils; crockery andchinaware & household products made from rubber & plastic; furniture& fixtures; watches/clocks & optical goods; radio, television & otherconsumer electronics; paper & other stationery items; books, magazines& newspapers; photographic equipment, games, toys & sports goods;leather goods & travel accessories; cleaning materials etc.

514 01 51401 Cotton

514 02 51402 Jute and Mesta

514 03 51403 Fertilizers (including advances granted to factories for distribution offertilizers) and pesticides

514 04 51404 Wholesale of solid, liquid and gaseous fuels and related products.

514 05 51405 Wholesale of metals and metal ores

514 06 51406 Wholesale of construction materials, hardware, plumbing and heatingequipment and supplies

514 09 51409 Wholesale of other intermediate products, waste and scrap [includesbasic industrial chemicals, plastic materials in primary forms, textilefibres, waste and scrap and materials for re-cycling etc.]

515 01 51501 Agricultural machinery and equipment

515 02 51502 Machinery, equipment and supplies (other than agricultural machineryand equipment)

519 01 51901 Handicrafts

519 02 51902 Carpets

519 09 51909 Other wholesale n.e.c.[Includes specialized wholesale not covered in anyone of the previous categories and wholesale in a variety of goods withoutany particular specialization.]

Annex 2.4 (Contd.)

GroupSub- Code


120


Division 52: Retail Trade (Except of Motor Vehicles and Motor Cycles); Repair of Personaland Household Goods

521 01 52101 Non-specialized retail trade in stores (General merchandise) includingconsumer co-operative stores

521 02 52102 Public utility services transacted through consumer co-operative stores& private retail traders (i.e. advances granted for fair price shops/authorised ration shops dealing in essential commodities i.e. wheat, rice,sugar, controlled cloth, kerosene oil, imported edible oil and soft coke)

(These retail outlets of the public distribution system fall under thepurview of statutory rationing/modified rationing/informal rationingadministered by State Government/Union Territory Administrations andthey are required to have separate physical entity (demarcated premises)and maintain separate books of accounts and records covering purchase,store and sale of essential commodities to family/ration card-holdersissued by Controller of Rationing/Directorate of Civil Supplies, etc.)

522 01 52201 Retail sale in specialized stores of food, beverages and tobacco

523 01 52301 Retail sale of Fertilizers and pesticides

523 02 52302 Retail sale of seeds

523 03 52303 Retail sale of Agricultural implements and machinery

523 11 52311 Retail sale of diamonds, gems & jewelry

523 12 52312 Retail sale of construction materials, hardware, paints and glass

523 13 52313 Retail sale in specialised stores of pharmaceutical and medical goods,cosmetic and toilet articles;

Textiles, clothing, footwear and leather goods [including travelaccessories];

Household appliances, articles and equipment;

Other retail sale in specialised stores like watches and clocks, computersand non-customized software, photographic, optical and other stores andsupplies etc., firewood, coal and kerosene oil and cooking gases, books,magazines and stationery, including distribution of newspapers, sportsgoods, games and toys, flowers and plants; pet animals; wall paper andfloor coverings; and other non-food products not elsewhere classified

523 19 52319 Other Retail trade n.e.c.

524 01 52401 Retail sale of second hand goods in stores(including the pawn shops)

525 01 52501 Retail trade not in stores e.g. via mail order houses [includes the activityof retail selling through tele-shopping]; via stocks and markets; viaInternet (network marketing) etc.; by salespersons who go from houseto house or by vending machines or on a fee or contract basis etc.

Annex 2.4 (Contd.)

GroupSub- Code


121

Banking Statistics

526 01 52601 Repairs of personal and household goods: includes repair of footwearand leather goods, household electrical appliances, TV,VCR, radio, taperecorder, refrigerator and other similar items, watches and clocks, bicyclesand cycle rickshaws etc.

[Repairs and services carried out by individual or company other thanthe manufacturer is to be classified here. Repairs of capital goods areclassified in the same class as the units that produce the goods]

H. HOTELS AND RESTAURANTS

Division 55: Hotels and Restaurants

551 01 55101 Hotels, Motels and Resorts; camping sites and other provision of short-stay accommodation [Restaurant facilities operated in connection withthe provision of lodging remain classified in this group. Also includedare the operation of sleeping cars when carried on by separate units]

552 01 55201 Restaurants, bars and canteens; Caterers-including door to door services;[Sales through vending machines is classified in 52501]

I. TRANSPORT, STORAGE AND COMMUNICATIONS

Division 60: Land Transport; Transport via pipelines

601 01 60101 Transport via railways [Includes passenger and freight transport by inter-urban railways. Also covers related activities such as shunting &switching]

602 01 60201 Scheduled passenger land transport [Includes activities providing regularurban, suburban or inter urban transport of passengers on scheduledroutes, other than inter urban railway transport. They may be carriedout with motor bus, tramway, trolley bus, underground and elevatedrailways. Also included are the operation of school buses, town-to-airport/station lines, sightseeing buses, aerial cableways etc.]

602 02 60202 Non-scheduled passenger land transport by man or animal drawn vehicleslike cycle-ricksaws; animals like horses, elephants, mules, camels etc.;Bullock-carts, ekkas, tongas etc.

Freight transport by man or animal drawn vehicles like cycle-ricksaws,hand cart, porters, coolies etc.; transport by animals like horses,elephants, mules, camels etc.; Bullock-carts, ekkas, tongas etc.

602 03 60203 Non-scheduled passenger land transport such as taxi operation, auto-rickshaws, scooters, rental of private cars with operator and otheroccasional coach services

Annex 2.4 (Contd.)

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122


602 04 60204 Freight transport by motor vehicles (trucks, buses, tempos etc.) includingrefrigerated vans

603 01 60301 Transport via pipelines [Includes transport via pipelines and the incidentalactivities like operation of pump stations and maintenance of thepipeline.]

Division 61: Water Transport

611 01 61101 Ocean and coastal water transport

612 02 61202 Inland water transport

Division 62: Air Transport

620 01 62001 Scheduled air transport

621 01 62101 Non-scheduled air transport

Division 63: Supporting and auxiliary transport activities, activities of travel agencies

630 01 63001 Warehousing

630 02 63002 Cold storage

630 11 63011 SUPPORTING SERVICES TO LAND TRANSPORT such as operation ofrailway stations, bus stations, highway bridges, toll roads, vehiculartunnels; parking lots and left-luggage facilities at the railway stations,bus stations; and traffic control activities

630 12 63012 SUPPORTING SERVICES INCIDENTAL TO WATER TRANSPORT such asoperation and maintenance of piers, docks, pilotage and loading andunloading of vessels

630 13 63013 SUPPORTING SERVICES TO AIR TRANSPORT such as operation andmaintenance of terminals, flying facilities, radio beacons, flying controlcentres and radar stations etc.

630 14 63014 Activities of travel agencies and tour operators; tourist assistance activitiesn.e.c.

630 19 63019 Activities of other transport agencies [Includes cargo handling, forwardingof freight, organisation or arrangement of transport on behalf of theshipper or consignee, receiving and acceptance of freight, transportationdocument preparation, consolidation and break bulk of freight, freightbrokerage, custom house brokerage, bill auditing and freight rateinformation, brokerage for ship and aircraft space, packing and cratingand unpacking and de-crating, weighing and sampling of freight etc.]

Annex 2.4 (Contd.)

GroupSub- Code


123

Banking Statistics

Division 64: Post and Telecommunications

641 01 64101 Post and courier activities

642 01 64201 Telecommunication services: includes the activities of STD/ISD booths,provision of value added telecom services like paging, e-mail, videoconferencing, Internet etc. (This includes cyber cafes); Activities of thecable operators

642 02 64202 Provision of basic telecom services including cellular phones ;Maintenance of telecom network; (erection/construction oftelecommunication lines covered under 45001)

J. FINANCIAL INTERMEDIATION

Division 65: Financial intermediation except Insurance and Pension Funding Banks

651 01 65101 Commercial Banks

651 02 65102 Regional Rural Banks

651 03 65103 Co-operative Banks

651 04 65104 Local Area Banks

Co-operative Institutions and Land Development Banks

659 01 65901 Primary Agricultural Credit Societies (PACS)

659 02 65902 Farmers Service Societies (FSS) and Large sized Adivasi Multi-purposeSocieties (LAMPS)

659 03 65903 Apex Co-operative Housing Finance Societies

659 04 65904 Co-operative Marketing Societies (including loans to co-operative banksfor re-lending to co-operative marketing societies) and Co-operatives ofproducers (for example, Aarey Milk Colony Co-operative society consistingof licencee cattle owners)

659 05 65905 Land Development Banks-SLDBs and PLDBs

659 09 65909 Other non-agricultural credit societies

Non-Banking Financial Institutions/companies

659 11 65911 Developmental Financial Institutions (e.g. IDBI, EXIM Bank, IFCI, ICICI,NHB, DFHI, SFCS, etc.)

659 12 65912 Housing finance companies/corporations, other specialised institutionsgranting credit for house purchase (including those accepting deposits)

659 21 65921 Factoring/Hire Purchase Finance Companies

Annex 2.4 (Contd.)

GroupSub- Code


124


659 22 65922 Chit funds/Kuri companies

659 23 65923 Saving & Loan companies

659 24 65924 Nidhis/Mutual benefit financial companies

659 25 65925 Non-operating financial holding companies (Investment companies)

659 26 65926 Financial Leasing companies (Equipment Leasing companies)

659 29 65929 Other NBFCs

Other financial intermediation

659 31 65931 Agricultural Finance Corporations

659 32 65932 Mutual Funds including Unit Trust of India

659 33 65933 Shroffs and other indigenous bankers (include pawn brokers, privatemoney lenders)

659 39 65939 Other financial intermediation n.e.c.

Division 66: Insurance and Pension Funding, Except compulsory Social Security

660 01 66001 Life insurance [This class includes life insurance (including reinsurance)and other long-term insurance, with or without a substantial savingelement, including the collection and investment of funds]

660 02 66002 Non-life insurance

660 03 66003 Pension funding [This class includes the provision of retirement incomes,including activities involving the collection and investment of funds]

Division 67: Activities auxiliary to Financial Intermediation

671 01 67101 Agro-industries Corporations

671 02 67102 Securities trading companies/broking firms

671 03 67103 Industrial Development Boards/Corporations/Federations including allState Development Boards and other Developmental Institutions (e.g.Tea Boards, Coffee Boards, Khadi Development Board etc.)

671 04 67104 Merchant banking/Financial services companies

671 05 67105 Loans for activities auxiliary to financial intermediation except insuranceand pension funding[like administration of financial markets, Securitydealing activities by stock/share brokers; Loans to financial advisers,mortgage advisers and brokers, bureaux de change etc.]

672 01 67201 Loans for activities auxiliary to insurance and pension funding [likeinsurance agents, average and loss adjusters, actuaries and salvageadministrators.]

Annex 2.4 (Contd.)

GroupSub- Code


125

Banking Statistics

K. REAL ESTATE, RENTING AND BUSINESS ACTIVITIES

Division 70: Real Estate Activities

700 01 70001 Real estate activities including leasing of Real property (construction isclassified in division 45).

Division 71: Renting of Machinery and Equipments

711 01 71101 Renting of land, water and air transport equipment

712 01 71201 Renting of construction and civil engineering machinery and equipment.Renting of office machinery and equipment [including computers]; Allother renting and non-financial leasing of machinery and equipmentn.e.c.

713 01 71301 Renting of personal and household goods n.e.c. [includes renting of allkinds of personal and household goods, whether the customers arehousehold or industries];

Division 72: Computer and Related Activities

721 01 72101 Hardware consultancy. [This class includes consultancy on type andconfiguration of hardware with or without associated software application.(Similar activities carried out by units selling computers are classifiedin class 30002).

722 01 72201 Software consultancy and supply. [includes activities in connection withanalysis, design and programming of systems ready to use. This usuallyinvolves the analysis of the users’ needs and problems, consultancy onthe most economic solution and producing the necessary software torealize this solution. Also included is the simple writing of programmesfollowing directives of the user. Specifically these activities involvedevelopment, production, supply and documentation of order-madesoftware]

723 01 72301 Data processing and Database activities

Data processing. [This includes the processing or tabulation of all typesof data. Provision of such services on (i) an hourly or time-share basis,and (ii) management or operation of data processing facilities of otherson a time sharing basis; on a fee or contract basis].

Database activities. [This includes data base development, data storageand data base availability. The provision of data in a certain order/sequence, accessible to everybody or to limited users and can be sortedon demand.].

725 01 72501 Maintenance and repair of office, accounting and computing machinery

729 01 72901 IT placement Services

Annex 2.4 (Contd.)

GroupSub- Code


126


729 09 72909 Other computer related activities [for example activities of developmentof multimedia presentation on account of others, maintenance of websiteson account of others etc.] (cyber cafe, communication through e-mail,internet & data transmission are to be coded at 64201)

Division 73: Research and Development

730 01 73001 Research and experimental development on natural sciences andengineering.

Research and experimental development on social sciences andhumanities. [Market research is classified in class 74101].

Division 74: Other Business Activities

741 01 74101 Professional services (except Medical) (Medical services to be coded at85102 and engineering/technical services at 74201)

Legal activities.[Legal services such as those rendered by advocates,barristers, solicitors, pleaders, mukhtiars, etc.]

Accounting, book-keeping and auditing activities; tax consultancy.

Market research and public opinion polling.

Business & management consultancy activities. [Includes the provisionof advice, guidance or operational assistance to businesses. Theseactivities involve public relations other than by paid advertisements,welfare and charity affairs, politics, lobbying. Activities in connectionwith project management, planning, organisation, managementinformation etc. Arbitration and conciliation between management andlabour. Also included are the activities of management holding companies.

742 01 74201 Architectural, engineering and other technical activities.

743 01 74301 Advertising and publicity concerns

744 01 74401 Merger, Acquisition & Restructuring of companies

749 01 74901 Labour recruitment and provision

Investigation and security activities

Services like Building cleaning activities, photographic activities,packaging activities not covered elsewhere

Other business activities and services n.e.c like Auctioning activities,Business brokerage activities, Photostat, blue-printing, Xeroxing, copyingof documents, ammonia printing and cyclostyling services, Fashiondesign, Services rendered by liaison offices etc.

Annex 2.4 (Contd.)

GroupSub- Code


127

Banking Statistics

L. PUBLIC ADMINISTRATION AND DEFENCE; COMPULSORY SOCIAL SECURITY

Division 75: Public Administration and Defence; Compulsory Social Security

750 01 75001 Activities of agencies that provide healthcare, education, cultural servicesand other social services, excluding social security - this includesMunicipal corporations, Municipalities, Water Drainage and sewerageboards and such public utilities

M. EDUCATION

Division 80: Education

Educational services rendered by schools/colleges/commercial institutions/universities:

800 01 80001 General Primary and Secondary education

800 02 80002 Higher education

800 03 80003 Technical and vocational education

N. HEALTH AND SOCIAL WORK

Division 85: Medical, Health and social Work

Medical and health services

851 01 85101 Hospital activities.[Includes the activities of general and specializedhospitals, sanatoria, asylums, rehabilitation centres, dental centres andother health institutions that have accommodation facilities, includingmilitary base and prison hospitals].

851 02 85102 Medical and dental practice activities. [Includes consultation andtreatment activities of general physicians and medical specialists includingdentists]

Other human health activities [Includes all activities for human healthother than by hospitals and medical doctors and dentists] - Activities ofAyurveda practitioners, Unani practitioners, homeopaths, nurses,physiotherapists or other para-medical practitioners, physical fitnesscentres, independent diagnostic/pathological laboratories, independentblood banks, independent ambulance activities etc.

852 01 85201 Veterinary activities (clinico-pathological and other diagnostic activitiespertaining to animals & birds)

853 01 85301 Social work- community and welfare services organised by individualsor organisations including NGOs and clubs

Annex 2.4 (Contd.)

GroupSub- Code


128


O. OTHER COMMUNITY, SOCIAL AND PERSONAL SERVICE ACTIVITIES

Division 90: Sewage and Refuse Disposal, Sanitation and Similar Activities

900 01 90001 Sewage and refuse disposal, sanitation and similar activities

Division 91: Activities of membership organisation

911 01 91101 Activities of business, employers and professional organisations [industryassociations, chamber of commerce and similar federations, associationof writers, painters, lawyers, doctors, journalists and other similarorganisations, trade unions etc]

919 01 91901 Services rendered by religious, political and other membershiporganizations

Division 92: Recreational, Cultural and Sporting Activities

921 01 92101 Motion picture and video production and distribution

921 09 92109 Other entertainment activities like

Radio and television activities, Motion picture projection

Dramatic arts, music and other arts and related activities

Other entertainment activities n.e.c. [Includes activities of ball rooms,video parlors, discotheques, amusement parks and similar attractions;circus; puppet shows and production of other kinds of entertainmentnot elsewhere classified.]

922 01 92201 News Agency Activities

923 01 92301 Library, archives, museums and other cultural activities

Library and information centres; Archives activities; Audio/video cassetteand CD Rom libraries

Museum activities and preservation of historical sites and buildings

Botanical and zoological gardens and nature reserve activities.

924 01 92401 Sporting and other recreational activities

Division 93: Other Service Activities

930 01 93001 Artisans and craftsmen (advances availed for pursuing self-employedactivities by carpenters, masons, brick-makers, potters, tailors, jewellers,hair-dressers, black-smiths, cobblers, washermen, plumbers, electricians,weavers, etc.)

930 02 93002 Services such as domestic, laundries, saloons, beauty parlours, potraitand commercial photographic studios and other self employed persons

Annex 2.4 (Contd.)

GroupSub- Code


129

Banking Statistics

Division 94: Personal Loans

940 01 94001 Staff housing loans (excluding, loans to staff under NHB Scheme)including the loans to co-operative housing societies of staff

940 02 94002 Housing loans under National Housing Bank Scheme(including, loansto staff under NHB Scheme), Other housing loans (excluding staff)including the loans to co-operative housing societies

940 03 94003 Loans for purchase of Motor Vehicle by individuals for personal use(motor vehicle including two-wheelers) excluding those given to staffmembers

940 04 94004 Loans for purchase of consumer durable goods excluding those given tostaff members (loan availed by a doctor for purchase of refrigerator forhis domestic use should be coded as 940.03 whereas a refrigerator tobe used in his clinic for professional purposes should be coded as 851.02)

940 05 94005 Education - loans to individuals for pursuit of studies (loans toeducational institutions should be included under division 80 and NOThere)

940 06 94006 Loans to staff for purposes other than housing including those againstFDRS, shares etc.

940 07 94007 Personal loans other than to staff members - loans against shares,debentures, Government securities, fixed deposit receipts, real estates,etc. (Such loans to other than individuals should be coded as perborrower’s activity/occupation).

940 07 94008 Loans advanced through credit cards

940 09 94009 Other personal loans (other than to staff members) include loans fordomestic consumption, medical expenses, travel, marriage, death andother social ceremonies, loans for repayment of debt, etc. (Loans againstFDRs/Financial securities In the case of individuals should be coded as940.07)

Division 99: MISCELLANEOUS

999 99 9999 All other loans not classified elsewhere or activities not adequatelydescribed (this code should be used sparingly)

Annex 2.4 (Concld.)

GroupSub- Code


130


Annex 2.5

ISO CURRENCY CODES

SL Currency Name CURCD SL Currency Name CURCD

1 Afghanistan Afghani AFA

2 Albanian Lek ALL

3 Algerian Dinar DZD

4 Angolan New Kwanza AOA

5 Argentine Peso ARS

6 Armenian Dram AMD

7 Aruban Florin AWG

8 Australian Dollar AUD

9 Azerbaijanian Manat AZM

10 Bahamanian Dollar BSD

11 Bahraini Dinar BHD

12 Bangladeshi Taka BDT

13 Barbados Dollar BBD

14 Belarussian Ruble BYR

15 Belize Dollar BZD

16 Bermudian Dollar BMD

17 Bhutan Ngultrum BTN

18 Bolivian Boliviano BOB

19 Botswana Pula BWP

20 Brazilian Real BRL

21 Brunei Dollar BND

22 Bulgarian Lev BGL

23 Burundi Franc BIF

24 Cambodian Riel KHR

25 Canadian Dollar CAD

26 Cape Verde Escudo CVE

27 Cayman Islands Dollar KYD

28 CFA Franc BCEAO XOF

29 CFA Franc BEAC XAF

30 CFP Franc XPF

31 Chilean Peso CLP

32 Chinese Yuan Renminbi CNY

33 Colombian Peso COP

34 Comoros Franc KMF

35 Congolese Franc CDF

36 Costa Rican Colon CRC

37 Croatian Kuna HRK

38 Cuban Peso CUP

39 Cyprus Pound CYP

40 Czech Koruna CZK

41 Danish Kroner DKK

42 Djibouti Franc DJF

43 Dominican Repub. Peso DOP

44 East Caribbean Dollar XCD

45 Egyptian Pound EGP

46 El Salvador Colon SVC

47 Eritrea Nakfa ERN

48 Estonian Kroon EEK

49 Ethiopian Birr ETB

50 Euro EUR

51 Falkland Islands Pound FKP

52 Fiji Dollar FJD

53 Gambian Dalasi GMD

54 Georgian Lari GEL

131

Banking Statistics

Annex 2.5 (Contd.)

ISO CURRENCY CODES


55 Ghanaian Cedi GHC

56 Gibraltar Pound GIP

57 Guatemalan Quetzal GTQ

58 Guinea Franc GNF

59 Guyana Dollar GYD

60 Haitian Gourde HTG

61 Honduran Lempira HNL

62 Hong Kong Dollar HKD

63 Hungarian Forint HUF

64 Iceland Krona ISK

65 Indian Rupee INR

66 Indonesian Rupiah IDR

67 Iranian Rial IRR

68 Iraqi Dinar IQD

69 Israeli New Shekel ILS

70 Jamaican Dollar JMD

71 Japanese Yen JPY

72 Jordanian Dinar JOD

73 Kazakhstan Tenge KZT

74 Kenyan Shilling KES

75 Kuwaiti Dinar KWD

76 Kyrgyzstan Som KGS

77 Lao Kip LAK

78 Latvian Lats LVL

79 Lebanese Pound LBP

80 Lesotho Loti LSL

81 Liberian Dollar LRD

82 Libyan Dinar LYD

83 Lithuanian Litas LTL

84 Macau Pataca MOP

85 Macedonian Denar MKD

86 Madagascar D.R. MalagasyFranc MGF

87 Malawi Kwacha MWK

88 Malaysian Ringgit MYR

89 Maldives Rufiyaa MVR

90 Maltese Lira MTL

91 Mauritanian Ouguiya MRO

92 Mauritius Rupee MUR

93 Mexican Peso MXN

94 Moldovan Leu MDL

95 Mongolian Tugrik MNT

96 Moroccan Dirham MAD

97 Mozambique Metical MZM

98 Myanmar Kyat MMK

99 Namibia Dollar NAD

100 Nepalese Rupee NPR

101 Netherlands Antillian Guilder ANG

102 New Zealand Dollar NZD

103 Nicaraguan Cordoba Oro NIO

104 Nigerian Naira NGN

105 North Korean Won KPW

106 Norwegian Krone NOK

107 Omani Rial OMR

108 Pakistan Rupee PKR

132


Annex 2.5 (Concld.)

ISO CURRENCY CODES


109 Panamanian Balboa PAB

110 Papua New Guinea Kina PGK

111 Paraguay Guarani PYG

112 Peruvian Nuevo Sol PEN

113 Philippine Peso PHP

114 Polish Zloty PLN

115 Portuguese Escudo PTE

116 Pound Sterling GBP

117 Qatari Rial QAR

118 Romanian Leu ROL

119 Russian Ruble RUR

120 Rwanda Franc RWF

121 Saint Helena Pound SHP

122 Samoan Tala WST

123 Sao Tome & Principe Dobra STD

124 Saudi Riyal SAR

125 Seychelles Rupee SCR

126 Sierra Leone Leone SLL

127 Singapore Dollar SGD

128 Slovak Koruna SKK

129 Slovenian Tolar SIT

130 Solomon Islands Dollar SBD

131 Somali Shilling SOS

132 South African Rand ZAR

133 South Korean Won KRW

134 Sri Lanka Rupee LKR

135 Sudanese Dinar SDD

136 Suriname Guilder SRG

137 Swaziland Lilangeni SZL

138 Swedish Krona SEK

139 Swiss Franc CHF

140 Syrian Pound SYP

141 Taiwan Dollar TWD

142 Tajikistan Somoni TJS

143 Tanzanian Shilling TZS

144 Thai Bhat THB

145 Tonga Pa’anga TOP

146 Trinidad and Tobago Dollar TTD

147 Tunisian Dinar TND

148 Turkish Lira TRL

149 Turkmenistan Manat TMM

150 UAE Dirham AED

151 Uganda Shilling UGX

152 Ukraine Hryvnia UAH

153 Uruguayan Peso UYU

154 US Dollar USD

155 Uzbekistan Sum UZS

156 Vanuatu Vatu VUV

157 Venezuelan Bolivar VEB

158 Vietnamese Dong VND

159 Yemeni Rial YER

160 Zambian Kwacha ZMK

161 Zimbabwe Dollar ZWD

162 Any Other Foreign Currency OTH

133

Banking Statistics

The LBS provide for the collection of data onthe positions of all banking offices located withinthe reporting area. Such offices report exclusivelyon their own (unconsolidated) business, whichthus includes international transactions with anyof their own affiliates (branches, subsidiaries,joint ventures) located either inside or outsidethe reporting area. The basic organizing principleunderlying the reporting system is the residenceof the banking office. This conforms to balanceof payments and external debt methodology. Inaddition, data on ownership or nationality basisare also calculated by regrouping according tocountry of origin. Thus, the LBS cover bothinternational assets and liabilities of offices ofdomestic and foreign banks operating within thereporting country. The LBS data are classifiedby currency (domestic and foreign currencies),sector (banks and non-banks) and country ofresidence of counter party, and by nationality ofreporting banks.

The CBS focus on the assets side of banks’balance sheet. The data mainly cover financialclaims reported by domestic banks’ offices,including the exposures of their foreign affiliates,and are collected on worldwide basis with inter-office transactions being netted out. Unlike thelocational banking statistics, the consolidatedbanking statistics call for maturity details ofassets, and they also entail a somewhat finersector breakdown (banks, non-bank public sectorand non-bank private sector). The additionalinformation can be used to supplement locationalbanking data while compiling and evaluatingexternal debt statistics from creditor side,although, unlike the locational statistics, thereporting system underlying the consolidatedstatistics does not conform to balance ofpayments and external debt methodology. Thus,in the CBS, banks with head office in thereporting country (e.g., India) provide data ontotal assets for their all offices in the reporting

Annex 2.6

METHODOLY OF COMPILATION OF LBS AND CBS

country and abroad excluding inter-officetransactions, i.e., data are reported onconsolidated basis. Affiliates/branches of foreignbanks operating in the reporting country (e.g.,India) also report their claims on countries otherthan the reporting country (e.g., India) includingtransactions with their offices outside thereporting country.

In the CBS, the reporting banks are classifiedunder three categories, viz., “Domestic Banks”having head offices in India, “Inside Area ForeignBanks” having head offices in another BISReporting country and “Outside Area ForeignBanks” having head offices outside BIS–Reportingcountries. The following aspects are taken intoconsideration for reporting/segregating theinternational claims for the three categories ofbanks:

Head offices of banks in the reporting countries(i.e., domestic banks) are required to provideconsolidated reports on financial claims of theiroffices worldwide both on an ultimate risk andan immediate borrower basis; worldwideconsolidated reporting entails that, for example,an Indian bank, with a foreign branch in theUS, should report – (a) the claims of its domesticbranches on all non-residents, (b) the claims ofits foreign branch in the US on all non-residents(but other than entities in India), and (c) theclaims, of its foreign branch in the US, onresidents/entities in the US in currencies otherthan US dollar. Claims between the Indian headoffice and its foreign branch in the US shouldbe netted out. Besides, the foreign branches arealso required to report their local assets and localliabilities in local currency.

Banking offices in reporting countries whosehead office is located in another reportingcountry (i.e., inside area foreign banks, such as,Mumbai office of a US bank where US is a BISreporting country) are required to provide non-

134


consolidated data on claims on entities in theirrespective home country only (e.g., the branchor subsidiary of a US bank in India should reportits claims on the US only to avoid the doublecounting of its claims on other countries whichare reported through its head office to the BIS)and on an immediate borrower basis only. Thesedata should, therefore, include any positions thebanks have vis-à-vis their own affiliates or headoffices in their home country.

Banking offices in reporting countries whosehead office is outside the reporting countries (i.e.,outside area foreign banks, such as, Mumbaioffice of a Thai bank where Thailand is not aBIS reporting country) are required to providenon-consolidated data on financial claims onnon-residents, including their home country, onan immediate borrower basis only.

The three major sub-components of internationalassets and liabilities are: (i) loans and deposits,

(ii) holding of debt securities and own issues ofdebt securities, and (iii) other assets andliabilities. The “other assets and liabilities” mainlycomprise, on the asset side, equity shares(including mutual and investment fund units andholdings of shares in a bank’s own name buton behalf of third parties), participations, andworking capital supplied by head offices to theirbranches abroad and, on the liability side,working capital received by local branches fromtheir head offices abroad.

The BIS revised its guidelines for consolidatedbanking statistics (CBS) by modifying itsreporting format and increasing the coverage ofproducts by including financial instruments suchas derivatives, guarantees, etc. The revisedsystem has been implemented from the reportingquarter March 2005, which covers, besidesexisting items, the claims of domestic reportingbanks on ultimate risk basis arising fromderivatives, guarantees and credit commitments.

TERMS USED IN INTERNATIONAL BANKING STATISTICS

Cross border positions : It refers to the transactions (assets/liabilities) with non-residentsin any currency.

International position : Banks’ on balance sheet assets and liabilities vis-à-vis non-residentsin any currency plus similar assets and liabilities vis-à-vis residentsin foreign currencies.

Foreign claims : It can be disaggregated into cross-border claims and local claims offoreign branches of domestic banks. Alternately, it can also bedisaggregated into international claims and local claims denominatedin local currencies.

International Claims : They are defined as cross border claims plus local claims in foreigncurrencies.

Cross-border Claims : They are the claims on the borrowers resident outside the countryin which the office of bank booking the claim is located.

Local Claims : It is the claim booked by foreign offices of domestic banks on theresident of the country in which foreign office is located.

135

Banking Statistics

EXPLANATION OF THE METHODOLOGY OF COMPILATION OF LBS/CBS AND DIFFERENTTERMS USED IN IBS WITH THE HELP OF AN EXAMPLE

Reporting of IBS Data

Assets with/Liabilities towards

Reporting Bank Assets/Liabilities Currency+ IN LK US XX

1 2 3 4

AssetLocal A — 15 25 10*

Non-Local B 15 5 30 10

LiabilityLocal C — 15 20 10*

Non-Local D 12 15 10 5

AssetLocal E 25 10 30 5

Non-Local F 20 30 35 10

LiabilityLocal G — — 35 —

Non-Local H — — — —

AssetLocal I — 20 25 15

Non-Local J 10 15 30 5

LiabilityLocal K — 20 35 10

Non-Local L 25 20 40 5

AssetLocal M — 20 15 10

Non-Local N 10 30 20 15

LiabilityLocal O — 12 25 10

Non-Local P 20 15 35 10

IN – INDIA, LK - SRI LANKA, US - UNITED STATES, XX - NOT A SPECIFIC COUNTRY

+ Local/non-local currency is according to the country of operation of the reporting branches.

* Asset/Liabilities with/towards own office operating in the country ‘XX’

’-’ Not required under IBS reporting

Domestic (Indian)Banks’ Branches in

India (IN)

Domestic (Indian)Banks’ Branches in

the US

US based Banks’Branches in India(IN) (Inside Area

Bank)

Sri Lanka basedBanks’ Branches inIndia(IN) (Outside

Area Bank)

136


COMPILATION OF LBS/CBS

Locational Banking Statistics (LBS)

Country International Assets International Liabilities

IN B1+J1+N1 35 D1+L1+P1 57

LK A2+B2+I2+J2+M2+N2 105 C2+D2+K2+L2+O2+P2 97

US A3+B3+I3+J3+M3+N3 145 C3+D3+K3+L3+O3+P3 165

XX A4+B4+I4+J4+M4+N4 65 C4+D4+K4+L4+O4+P4 50

Consolidated Banking Statistics (CBS)

Reporting Banks according Cross Border Local Claims in Interna- Foreignto Country of Incorporation Claims (in all Currency tional Claims

currencies) Claims

Non local Local

1 2 3 4 [=’1'+’2'] 5 [=’3'+’4']

Domestic (Indian) Banks X 140 35 30 175 205

Inside Area Banks Y 55 — — 55 55

Outside Area Banks Z 110 — — 110 110

Note: The claims on home country (i.e., India) is excluded in CBS

X1= 140 (= A2+A3+A4+B2+B3+E2+E4+F2+F4) X2= 35 (=F3) X3= 30 (=E3)

Y1= 55 (=I3+J3) Z1= 110 (=M2+M3+M4+N2+N3+N4)

‘-’ Not required under CBS reporting.

137

Banking Statistics

Annex 2.7

COUNTRY INFORMATION AS PER ISO COUNTRY CODE

SL. COUNTRY NAME COUNCD SL. COUNTRY NAME COUNCD

1 Afghanistan AF

2 Albania AL

3 Algeria DZ

4 American Samoa AS

5 Andorra AD

6 Angola AO

7 Anguilla AI

8 Antarctica (British) AQ

9 Antigua & Barbuda AG

10 Argentina AR

11 Armenia AM

12 Aruba AW

13 Australia AU

14 Austria AT

15 Azerbaijan AZ

16 Bahamas BS

17 Bahrain BH

18 Bangladesh BD

19 Barbados BB

20 Belarus BY

21 Belgium BE

22 Belize BZ

23 Benin BJ

24 Bermuda BM

25 Bhutan BT

26 Bolivia BO

27 Bosnia & Herzegovina BA

28 Botswana BW

29 Bouvet Island BV

30 Brazil BR

31 British Indian Ocean Territory IO

32 British Overseas Territory 1W

33 British Virgin Islands VG

34 Brunei BN

35 Bulgaria BG

36 Burkina Faso(Formerly Upper Volta) BF

37 Burundi BI

38 Cambodia(Formerly Kampuchea) KH

39 Cameroon CM

40 Canada CA

41 Cape Verde CV

42 Cayman Islands KY

43 Central African Republic CF

44 Chad TD

45 Chile CL

46 China CN

47 Christmas Island CX

48 Cocos (Keeling) Islands CC

49 Colombia CO

50 Comoros Islands KM

51 Congo CG

52 Congo Democratic(Former Zaire) CD

53 Cook Islands CK

54 Costa Rica CR

55 Cote D’ivoire CI

56 Croatia HR

57 Cuba CU

58 Cyprus CY

59 Czech Republic CZ

60 Denmark DK

61 Djibouti DJ

62 Dominica DM

63 Dominican Republic DO

64 Ecuador EC

138


Annex 2.7 (Contd.)



65 Egypt EG

66 El Salvador SV

67 Equatorial Guinea GQ

68 Eritrea ER

69 Estonia EE

70 Ethiopia ET

71 Faeroe Islands FO

72 Falkland Islands FK

73 Fiji FJ

74 Finland (incl. Aland Islands) FI

75 France FR

76 French Guiana GF

77 French Polynesia PF

78 French Southern Territories TF

79 Gabon GA

80 Gambia GM

81 Georgia GE

82 Germany (Includes ECB) DE

83 Ghana GH

84 Gibraltar GI

85 Greece GR

86 Greenland GL

87 Grenada GD

88 Guadeloupe GP

89 Guam GU

90 Guatemala GT

91 Guernsey GG

92 Guinea GN

93 Guinea-Bissau GW

94 Guyana GY

95 Haiti HT

96 Heard & McDonald Islands HM

97 Honduras HN

98 Hong Kong HK

99 Hungary HU

100 Iceland IS

101 India IN

102 Indonesia ID

103 Iran IR

104 Iraq IQ

105 Ireland IE

106 Isle of Man IM

107 Israel IL

108 Italy IT

109 Jamaica JM

110 Japan JP

111 Jersey JE

112 Jordan JO

113 Kazakhstan KZ

114 Kenya KE

115 Kiribati KI

116 Kuwait KW

117 Kyrgyzstan Republic KG

118 Laos LA

119 Latvia LV

120 Lebanon LB

121 Lesotho LS

122 Liberia LR

123 Libya LY

124 Liechtenstein LI

125 Lithuania LT

126 Luxembourg LU

127 Macao MO

128 Macedonia (Former Yugoslav) MK

129 Madagascar MG

130 Malawi MW

139

Banking Statistics

Annex 2.7 (Contd.)



131 Malaysia MY

132 Maldives MV

133 Mali ML

134 Malta MT

135 Marshall Islands MH

136 Martinique MQ

137 Mauritania MR

138 Mauritius MU

139 Mayotte YT

140 Mexico MX

141 Micronesia FM

142 Moldova MD

143 Monaco MC

144 Mongolia MN

145 Montserrat MS

146 Morocco MA

147 Mozambique MZ

148 Myanmar (Formerly Burma) MM

149 Namibia NA

150 Nauru NR

151 Nepal NP

152 Netherlands NL

153 Netherlands Antilles AN

154 New Caledonia NC

155 New Zealand(Minor Is. & Ross Depend.) NZ

156 Nicaragua NI

157 Niger NE

158 Nigeria NG

159 Niue NU

160 Norfolk Island NF

161 North Korea KP

162 Northern Mariana Islands MP

163 Norway NO

164 Oman OM

165 Pakistan PK

166 Palau PW

167 Palestinian Territory PS

168 Panama(incl. Panama Canal Zone) PA

169 Papua New Guinea PG

170 Paraguay PY

171 Peru PE

172 Philippines PH

173 Pitcairn Islands PN

174 Poland PL

175 Portugal (incl. Azores & Madeira) PT

176 Puerto Rico PR

177 Qatar QA

178 Residual Africa 2W

179 Residual Asia & Pacific 2O

180 Residual Europe 2B

181 Residual former Soviet Union 2T

182 Residual former Yugoslavia 2S

183 Residual Latin America &Caribbean 2H

184 Reunion RE

185 Romania RO

186 Russia RU

187 Rwanda RW

188 Saint Helena SH

189 Saint Kitts and Nevis KN

190 Saint Lucia LC

191 Saint Pierre and Miquelon PM

192 Saint Vincent (incl. Grenadines) VC

193 Samoa WS

140


Annex 2.7 (Concld.)



@: The list of International Organizations is provided at the end of this ANNEXURE.#: A joint venture in which no single owner has a controlling interest.Note: A list of Official Monetary Authorities which includes central banks of various countries, the Bank for

International Settlements (BIS), European Central Banks (ECB), etc., is provided in the next pages.

194 San Marino SM

195 Sao Tome and Principe ST

196 Saudi Arabia SA

197 Senegal SN

198 Serbia & Montenegro CS

199 Seychelles SC

200 Sierra Leone SL

201 Singapore SG

202 Slovakia SK

203 Slovenia SI

204 Solomon Islands SB

205 Somalia SO

206 South Africa ZA

207 South Georgia &South Sandwich Is. GS

208 South Korea KR

209 Spain ES

210 Sri Lanka LK

211 Sudan SD

212 Suriname SR

213 Svalbard and Jan Mayen SJ

214 Swaziland SZ

215 Sweden SE

216 Switzerland (Includes BIS) CH

217 Syria SY

218 Taiwan, China TW

219 Tajikistan TJ

220 Tanzania TZ

221 Thailand TH

222 Timor-Leste TL

223 Togo TG

224 Tokelau TK

225 Tonga TO

226 Trinidad and Tobago TT

227 Tunisia TN

228 Turkey TR

229 Turkmenistan TM

230 Turks and Caicos Islands TC

231 Tuvalu (formerly Ellice Islands) TV

232 Uganda UG

233 Ukraine UA

234 United Arab Emirates AE

235 United Kingdom GB

236 United States US

237 Uruguay UY

238 US Pacific Islands PU

239 US Virgin Islands VI

240 Uzbekistan UZ

241 Vanuatu VU

242 Vatican VA

243 Venezuela VE

244 Vietnam VN

245 Wallis and Futuna WF

246 West Indies UK 1Z

247 Western Sahara EH

248 Western Samoa WS

249 Yemen YE

250 Zambia ZM

251 Zimbabwe ZW

252 No Specific Country (Unknown) XX

253 International Organization @ ZZ

254 Consortium Bank # VV

141

Banking Statistics

Annex 2.8

INTERNATIONAL ORGANISATIONS along with SECTOR CODES(COUNCD=ZZ)

(The List covers the most important organizations, but it is not exhaustive)

NAME OF ORGANISATIONSHEAD SECTOR

QUARTERs CODE

A. EU ORGANISATIONS

1. European Atomic Energy Community (EURATOM) Brussels 30

2. European Coal and Steel Community (ECSC) Brussels 30

3. European Union (EU) Brussels 30

4. European Investment Bank (EIB) Luxembourg 12

B. OTHER EUROPEAN ORGANISATIONS

1. Council of Europe (CE) Strasbourg 30

2. European Free Trade Association (EFTA) Geneva 30

3. European Organization for Nuclear Research (CERN) Geneva 30

4. European Space Agency (ESA) Paris 30

5. European Telecommunications Satellite Organization (EUTELSAT) Paris 30

6. Western European Union (WEU) Brussels 30

C. INTER GOVERNMENTAL ORGANISATIONS

1. Association of South East Asian Nations (ASEAN) Jakarta 30

2. Caribbean Community (CARICOM) Georgetown(Guyana) 30

3. Central American Common Market (CACM) Guatemala City 30

4. Colombo Plan Colombo (Sri Lanka) 30

5. Economic Community of West African States (ECOWAS) Lagos (Nigeria) 30

6. Latin American Association of Development FinancingInstitutions (ALIDE) Lima 30

7. Latin American Economic System (SELA) Caracas 30

8. Latin American Integration Association (LAIA) Montevideo 30

9. League of Arab States (LAS) Cairo 30

10. North Atlantic Treaty Organization (NATO) Brussels 30

11. Organisation for Economic Co-operation and Development (OECD) Paris 30

12. Organisation of American States (OAS) Washington 30

13. Organisation of Central American States (OCAS) San Salvador 30

14. Organisation of Eastern Caribbean States (OECS) Castries (St Lucia) 30

15. Organization of African Unity (OAU) Addis Ababa (Ethiopia) 30

16. South Asian Association for Regional Cooperation (SAARC) Kathmandu (Nepal) 30

17. West African Economic Community (WAEC) Ouagadougou(Burkina Faso) 30

142


Annex 2.8 (Contd.)



QUARTERs CODE

D. UNITED NATIONS (UN) and ITs FUNDS/AGENCIES

1. United Nations (UN) New York 30

2. United Nations Conference on Trade and Development (UNCTAD) Geneva 30

3. United Nations Children’s Fund (UNICEF) New York 30

4. Food and Agriculture Organization (FAO) Rome 30

5. International Atomic Energy Agency (IAEA) Vienna 30

6. International Bank for Reconstruction and Development (IBRD) Washington 12

7. International Civil Aviation Organisation (ICAO) Montreal 30

8. International Development Association (IDA) Washington 12

9. International Finance Corporation (IFC) Washington 12

10. International Fund for Agricultural Development (IFAD) Rome 30

11. International Labour Organization (ILO) Geneva 30

12. International Maritime Organization (IMO) London 30

13. International Monetary Fund (IMF) Washington 12

14. International Telecommunications Union (ITU) Geneva 30

15. United Nations Educational, Scientific andCultural Organization (UNESCO) Paris 30

16. Universal Postal Union (UPU) Berne 30

17. World Health Organization (WHO) Geneva 30

18. World Intellectual Property Organization (WIPO) Geneva 30

19. World Meteorological Organization (WMO) Geneva 30

20. World Trade Organization (WTO) Geneva 30

E. REGIONAL AID BANKS AND FUNDS

1. African Development Bank Group Abidjan (Cote d’Ivoire) 12

2. Andean Development Corporation (ADC) Caracas 12

3. Arab Bank for Economic Development in Africa (BADEA) Khartoum 12

4. Arab Fund for Economic and Social Development in Africa (AFESD) Manama 12

5. Arab Monetary Fund (AMF) Abu Dhabi 12

6. Asian Clearing Union (ACU) Teheran 12

7. Asian Development Bank (ADB) Manila 12

8. Caribbean Development Bank (CDB) St Michael (Barbados) 12

9. Central African States’ Development Bank (CASDB) Brazzaville (Congo) 12

143

Banking Statistics

Annex 2.8 (Concld.)



QUARTERs CODE

10. Central American Bank for Economic Integration (CABEI) Tegucigalpa DC (Honduras) 12

11. East African Development Bank (EADB) Kampala 12

12. European Bank for Reconstuction and Development (EBRD) London 12

13. Inter- American Development Bank (IADB) Washington 12

14. Islamic Development Bank (IsDB) Jeddah (Saudi Arabia) 12

15. Latin American Reserve Fund (LARF) Santafe de Bogota 12

16. Nordic Investment Bank (NIB) Helsinki 12

17. OPEC Fund for International Development (OFID) Vienna 12

18. West African Clearing House (WACH) Lagos (Nigeria) 12

19. West African Monetary Union (WAMU) Senegal 12

F. COMMODITY ORGANISATIONS

1. Intergovernmental Council of Copper Exporting Countries (CIPEC) Paris 30

2. International Cocoa Organization (ICCO) London 30

3. International Coffee Organization (ICO) London 30

4. International Cotton Advisory Committee (ICAC) Washington 30

5. International Jute Organization (IJO) Dhaka (Bangladesh) 30

6. International Lead and Zinc Study Group (ILZSG) London 30

7. International Natural Rubber Organization (INRO) Kuala Lumpur 30

8. International Olive Oil Council (IOOC) Madrid 30

9. International Rubber Study Group (IRSG) Wembley 30

10. International Sugar Organization (ISO) London 30

11. International Tin Council (ITC) London 30

12. International Wheat Council (IWC) London 30

13. Latin American Energy Organization (OLADE) Quito (Ecuador) 30

14. Organization of Arab Petroleum Exporting Countries (OAPEC) Cairo 30

15. Organisation of the Petroleum Exporting Countries (OPEC) Vienna 30

G. OTHERS

1. International Red Cross (IRC) Geneva 30

2. World Council of Churches (WCC) Geneva 30

3. International Maritime Satellite Organisation (INMARSAT) London 30

144


Annex 2.9

OFFICIAL MONITORY AUTHORITIES

Sr. COUNTRYNo.

INSTITUTION CENTER COUNTRY CODE

DEVELOPED COUNTRIES

EUROPE

1 Austrian National Bank Vienna Austria AT

2 National Bank of Belgium Brussels Belgium BE

3 National Bank of Denmark Copenhagen Denmark DK

4 European Central Bank Frankfurt Euro area DE

5 Bank of Finland Helsinki Finland FI

6 Bank of France Paris France FR

7 Deutsche Bundesbank Frankfurt Germany DE

8 Bank of Greece Athens Greece GR

9 Central Bank of Iceland Reykjavík Iceland IS

10 Central Bank of Ireland Dublin Ireland IE

11 Bank of Italy Rome Italy IT

12 Ufficio Italiano dei Cambi Rome Italy IT

13 Central Bank of Luxembourg Luxembourg Luxembourg LU

14 Netherlands Bank Amsterdam Netherlands NL

15 Central Bank of Norway Oslo Norway NO

16 Bank of Portugal Lisbon Portugal PT

17 San Marinese Institut of Credit San Marino San Marino SM

18 Bank of Spain Madrid Spain ES

19 Sveriges Riksbank Stockholm Sweden SE

20 Swiss National Bank Zurich Switzerland/Liechtens CH

21 Bank for International Settlements Basel Switzerland CH

22 Bank of England London United Kingdom GB

OTHER COUNTRIES

23 Reserve Bank of Australia Sydney Australia AU

24 Bank of Canada Ottawa Canada CA

25 Bank of Japan Tokyo Japan JP

26 Reserve Bank of New Zealand Wellington New Zealand NZ

27 Federal Reserve System (the Federal Reserve Board, United States USthe Federal Reserve Bank, of NY and the 11 other FRB)

145

Banking Statistics

Annex 2.9 (Contd.)


Sr. COUNTRYNo.


OFFSHORE CENTRES

28 Central Bank of Aruba Oranjestad Aruba AW

29 Central Bank of the Bahamas Nassau Bahamas BS

30 Bahrain Monetary Agency Manama Bahrain BH

31 Central Bank of Barbados Bridgetown Barbados BB

32 Bermuda Monetary Authority Hamilton Bermuda BM

33 Cayman Islands Monetary Authority Georgetown Cayman Islands KY

34 Hong Kong Monetary Authority Hong Kong Hong Kong HK

35 Central Bank of Lebanon Beirut Lebanon LB

36 Monetary and Foreign Exchange Authority of Macau Macau Macau SAR MO

37 Bank of Mauritius Port Louis Mauritius MU

38 Bank of the Netherlands Antilles Willemstad, Netherlands ANCuracao Antilles

39 National Bank of Panama Panama Panama PA

40 Monetary Authority of Singapore Singapore Singapore SG

41 Reserve Bank of Vanuatu Port Vila Vanuatu VU

DEVELOPING ECONOMIES

AFRICA AND MIDDLE EAST

42 Bank of Algeria Algiers Algeria DZ

43 National Bank of Angola Luanda Angola (Republic of) AO

44 The Bank of Botswana Gaborone Botswana BW

45 Bank of the Republic of Burundi Bujumbura Burundi BI

46 Bank of Cape Verde Praia Cape Verde Islands CV

47 Bank of states of Central Africa Yaounde Central Africa: CFCamero, Chad,Central African,Republic, Congo,Gabon,, EquatorialGuinea)

48 Central Bank of Congo Kinshasa Congo, Democratic Re CG

49 Central Bank of The Comoros Moroni Comoros KM

50 National Bank of Dijbouti Djibouti Djibouti DJ

51 Central Bank of Egypt Cairo Egypt EG

146


Annex 2.9 (Contd.)


Sr. COUNTRYNo.


52 National Bank of Eritrea Asmara Eritrea ER

53 National Bank of Ethiopia Addis Ababa Ethiopia ET

54 Central Bank of The Gambia Banjul The Gambia GM

55 Bank of Ghana Accra Ghana GH

56 Central Bank of the Republic of Guinea Conakry Guinea GN

57 The Central Bank of the Islamic Republic of Iran Tehran Iran IR

58 Central Bank of Iraq Baghdad Iraq IQ

59 Bank of Israel Jerusalem Israel IL

60 Central Bank of Jordan Amman Jordan JO

61 Central Bank of Kenya Nairobi Kenya KE

62 Central Bank of Kuwait Kuwait Kuwait KW

63 Central Bank of Lesotho Maseru Lesotho LS

64 National Bank of Liberia Monrovia Liberia LR

65 Central Bank of Libya Tripoli Libya LY

66 Central Bank of Madagascar Antananarivo Madagascar MG

67 Reserve Bank of Malawi Lilongwe Malawi MW

68 Central Bank of Mauritania Nouakchott Mauritania MR

69 Bank of Morocco Rabat Morocco MA

70 Bank of Mozambique Maputo Mozambique MZ

71 Bank of Namibia Windhoek Namibia NA

72 Central Bank of Nigeria Lagos Nigeria NG

73 Central Bank of Oman Ruwi, Muscat Oman OM

74 Qatar Central Bank Doha Qatar QA

75 National Bank of Rwanda Kigali Rwanda RW

76 Central Bank of São Tomé and Príncipe São Tomé São Tomé and STPríncipe

77 Saudi Arabian Monetary Agency Riyadh Saudi Arabia SA

78 Central Bank of Seychelles Victoria Seychelles SC

79 Bank of Sierra Leone Freetown Sierra Leone SL

80 Central Bank of Somalia Mogadishu Somalia SO

81 South African Reserve Bank Pretoria South Africa ZA

147

Banking Statistics

Annex 2.9 (Contd.)


Sr. COUNTRYNo.


82 Bank of Sudan Khartoum Sudan SD

83 The Central Bank of Swaziland Mbabane Swaziland SZ

84 Central Bank of Syria Damascus Syria SY

85 Bank of Tanzania Dar es Salaam Tanzania TZ

86 Central Bank of Tunisia Tunis Tunisia TN

87 Bank of Uganda Kampala Uganda UG

88 Abu Dhabi Investment Authority United Arab Emirates: AE

89 Central Bank of the United Arab Emirates, Abu Dhabi Abu Dhabi, Dubai, AEGovernment of Dubai Sharjah, Ajman,

Umm Al, Quaiwain,Ras al, Khaimah,Fujairah

90 Bank of the States of Western Africa Dakar West African Mone- ZAtary, Union: Benin,Burkina, d’Ivoire,Guinea-Bissau,Mali, Niger, Senegaland Togo

ASIA AND PACIFIC

91 Central Bank of Yemen Sana’a Yemen YE

92 Bank of Zambia Lusaka Zambia ZM

93 Reserve Bank of Zimbabwe Harare Zimbabwe ZW

94 The Central Bank of Afghanistan Kabul Afghanistan AF

95 Central Bank of Armenia Yerevan Armenia AM

96 National Bank of Azerbaijan Baku Azerbaijan AZ

97 Bangladesh Bank Dhaka Bangladesh BD

98 Royal Monetary Authority of Bhutan Thimphu Bhutan BT

99 Brunei Monetary Board Darussalam Brunei Darussalam BN

100 National Bank of Cambodia Phnom Penh Cambodia KH

101 The People’s Bank of China Beijing China CN

102 Reserve Bank of Fiji Suva Fiji FJ

103 Institut d’Emission d’Outre-Mer Papeete French Polynesia PF

104 National Bank of Georgia Tbilisi Georgia GE

105 Reserve Bank of India Bombay India IN

106 Bank Indonesia Jakarta Indonesia ID

148


Annex 2.9 (Contd.)


Sr. COUNTRYNo.


107 National Bank of the Republic of Kazakhstan Almaty Kazakhstan KZ(Republic of)

108 Bank of Kiribati Tarawa Kiribati KI

109 Central Bank of Korea Pyongyang North Korea (People’s KPDemocratic Republic

110 The Bank of Korea Seoul Korea South KR

111 The National Bank of the Kyrgyz Republic Bishkek Kyrgyz Republic KG

112 Bank of the Lao People’s Democratic Republic Vientiane Laos (Lao People, LADemocratic Republic)

113 Central Bank of Malaysia Kuala Lumpur Kuala Lumpur Malaysia MY

114 Maldives Monetary Authority Male Maldives MV

115 The Bank of Mongolia Ulan Bator Mongolia MN

116 Central Bank of Myanmar Rangoon Myanmar MM

117 Bank of Nauru Nauru Nauru (Republic of) NR

118 Central Bank of Nepal Katmandu Nepal NP

119 Institut d’Emission d’Outre-Mer Nouméa New Caledonia NC

120 State Bank of Pakistan Karachi Pakistan PK

121 Bank of Papua New Guinea Port Moresby Papua New Guinea PG

122 Central Bank of the Philippines Manila Philippines PH

123 Central Bank of Solomon Islands Honiara Solomon Islands SB

124 Central Bank of Sri Lanka Colombo Sri Lanka LK

125 The Central Bank of China (Taiwan) Taipei Taiwan TW

126 National Bank of the Republic of ,Tajikstan Dushanbe Tajikstan TJ(Republic of)

127 Bank of Thailand Bangkok Thailand TH

128 National Reserve Bank of Tonga Nuku’alofa Tonga TO

129 Central Bank of Turkmenistan Ashkhabat Turkmenistan TM

130 National Bank of Tuvalu Funafuti Tuvalu TV

131 Central Bank of the Republic of Uzbekistan Tashkent Uzbekistan UZ(Republic of)

132 State Bank of Vietnam Hanoi Vietnam VN

133 Institut d’Emission d’Outre-Mer Mata-Utu Wallis and Futuna WF

134 Central Bank of Samoa Apia Western Samoa WS

149

Banking Statistics

Annex 2.9 (Contd.)


Sr. COUNTRYNo.


135 Bank of Albania Tirana Albania AL

136 National Bank of the Republic of Belarus Minsk Belarus (Republic of) BY

137 Central Bank of Bosnia and Herzegovina Sarajevo Bosnia and BAHerzegovin

138 Bulgarian National Bank Sofia Bulgaria BG

139 Croatian National Bank Zagreb Croatia HR

140 Central Bank of Cyprus Nicosia Cyprus CY

141 Czech National Bank Prague Czech Republic CZ

142 Bank of Estonia Tallinn Estonia EE

143 National Bank of Hungary Budapest Hungary HU

144 Bank of Latvia Riga Latvia LV

145 The Bank of Lithuania Vilnius Lithuania LT

EUROPE

146 National Bank of the Republic of Macedonia Skopje Macedonia MK(Republic of)

147 Central Bank of Malta Valletta Malta MT

148 National Bank of Moldova Chisinau Moldova MD

149 National Bank of Poland Warsaw Poland PL

150 National Bank of Romania Bucharest Romania RO

151 Central Bank of the Russian Federation Moscow Russia RU

152 National Bank of Slovakia Bratislava Slovak Republic SK

153 Bank of Slovenia Ljubljana Slovenia SI

154 Central Bank of the Republic of Turkey Ankara Turkey TR

155 National Bank of Ukraine Kiev Ukraine UA

156 National Bank of Yugoslavia Belgrade Yugoslavia YU(Monteneg, Serbia,Kosovo, Vojvodina)

157 Eastern Caribbean Central Bank Basseterre, Anguilla, Antigua KNSt Kitts and St Kitts-Nevis,

St Lucia

158 Central Bank of the Argentine Republic Buenos Aires Argentina AR

159 Central Bank of Belize Belize City Belize BZ

160 Central Bank of Bolivia La Paz Bolivia BO

150


Annex 2.9 (Concld.)


Sr. COUNTRYNo.


161 Central Bank of Brazil Brasília Brazil BR

162 Central Bank of Chile Santiago de Chile CLChile

163 Bank of the Republic Santafé de Colombia COBogotá

164 Central Bank of Costa Rica San José San Jose Costa Rica CR

165 Central Bank of Cuba Havana Cuba CU

166 Central Bank of the Dominican Republic Santo Dominican DODomingo Republic

167 Central Bank of Ecuador Quito Ecuador EC

168 Central Reserve Bank of El Salvador San Salvador El Salvador SV

169 Bank of Guatemala Guatemala Guatemala GTCity

LATIN AMERICA AND CARIBBEAN AREA

170 Bank of Guyana Georgetown Guyana GY

171 Bank of the Republic of Haïti Port-au-Prince Haiti HT

172 Central Bank of Honduras Tegucigalpa Honduras HN

173 Bank of Jamaica Kingston Jamaica JM

174 Bank of Mexico México City Mexico MX

175 Central Bank of Nicaragua Managua Nicaragua NI

176 Central Bank of Paraguay Asunción Paraguay PY

177 Central Reserve Bank of Peru Lima Peru PE

178 Central Bank of Surinam Paramaribo Surinam SR

179 Central Bank of Trinidad and Tobago Port of Spain Trinidad and TTTobago

180 Central Bank of Uruguay Montevideo Uruguay UY

181 Central Bank of Venezuela Caracas Venezuela VE

151

Banking Statistics

REPORTING BY BRANCHES/SUBSIDIARIES:

Banks branches in India (including foreignbanks) and foreign branches/subsidiaries ofIndian Banks are required to submit counterparty and contract wise marked to market (MTM)values of derivative (viz., forwards, swaps, FRA,futures, options, credit derivatives, etc.,)contracts on gross basis (i.e., positive as well asnegative market/fair values) in equivalent USDollar with details of currency of settlement,country of the counter party, country and sectorof ultimate risk, to their respective head/principal offices. It may be mentioned thatcounter party wise netting (where specific legallyenforceable bilateral netting arrangement suchas International Swaps and DerivativeAssociation (ISDA) master agreement, etc., exists)would be done at head office level. Theinformation on subsidiaries is not required tobe reported unless there is an explicit guaranteeprovided by the parent.

All derivatives whether held in the banking ortrading book (hedge or trading) should bereported on fair value basis.

Credit derivatives, such as, credit default swapsand total return swaps, should be reported, ifthey belong to the trading book of a protectionbuying reporting bank. Credit derivatives thatbelong to the banking book should be reportedas “Risk transfers” by the protection buyer.

In case of credit derivatives, on the trading book,there are basically three parties, the protectionseller, the protection buyer and the issuer of theunderlying. The country of ultimate risk shallbe based on the issuer of the underlying. Hence,if a buyer of credit default swaps have underlyingbonds/debentures, whose issuer is located in US.The ultimate risk is on the US. The value of thederivatives shall be the amount of the loan/investment less the expected recovery from theunderlying.

Currency of Reporting: Counter party andcontract wise MTM values of all derivativecontracts are to be reported in equivalent US

Annex 2.10

REPORTING OF DERIVATIVES UNDER IBS

Dollar based on spot rates as published byFEDAI on the relevant reporting dates. However,the currency of reporting should be the currencyof settlement and the same should be reportedas ISO currency codes provided in Annexure-III.The detail information on currency of settlementand country of counterparty of derivativecontracts are required for the purpose of nettingat HO/PO.

Country of the Counter Party: is the countrywhere the counter party is located/operating. Ifthe reporting bank/branch has a derivativecontract with a branch/office of a Singaporebased bank in India the country of the counterparty will be India (IN) and the country ofultimate risk (guarantor) will be Singapore (SG).

Country of Ultimate Risk: is defined as thecountry in which the guarantor of a financialclaim resides and/or the country in which thehead office of a legally dependent branch islocated e.g., An Indian Bank which has a crosscurrency swap with a US based bank’s branch/office in Thailand, the country of ultimate riskis US and the country of the counter party isThailand. Collateral that is liquid and availablein a country other than that of the borrowermay be considered in the same manner asguarantees for this purpose. Claims on legallyindependent subsidiaries can only be consideredas being guaranteed by the head office if theparent has provided an explicit guarantee. Incontrast, claims on legally dependent branchesare by definition always guaranteed by therespective head office. In the case of amultinational enterprise in India whose headoffice is outside India, it needs to be determinedwhether the head office has provided a guaranteeto its office in India or not. If, it has, the ultimaterisk country is that of the head office. If it hasnot provided a guarantee, the ultimate riskcountry is India.

Sector of Ultimate Risk: is the sector of theguarantor of a financial claim, e.g., bank, non-bank public sector, non-bank private sector,governments, etc.

152


Valuation: The valuation of derivatives should bebased on marked to market (MTM) and on netpresent value (NPV) basis. However, counterparty wise netting would be done at banks’head/principal office and NOT at branch level.With respect to MTM methodology of valuing FXforward contracts, the current practice may befollowed till the NPV method is introduced forforward contracts. The valuation should beperformed based on the general guidanceprovided below.

Guidance for Arriving at Fair/Market Value:

As a general rule, for an instrument that isactively traded on a recognized public exchange,the price quoted by the exchange where theinstrument is traded is used as the basevaluation price to arrive at the fair value of theinstrument.

In case of instruments that are actively tradedover the counter, the quoted bid price for longpositions and quoted offer price for shortpositions is used as the base valuation price.These may be obtained through relevant marketmakers or brokers.

In case of less actively traded instruments/non-traded OTC derivatives, various techniques areused to determine the best estimate of a marketprice. This synthetic market price may be derivedthrough use of market data (such as interest/exchange rates) in appropriate models/systemsdesigned for this purpose.

In case of the following instruments, fair valuecan be arrived at using the market data asmentioned there against:

FX spot / forwards Prices as published by FEDAI

Exchange traded Prices quoted on the relevantinterest rate futures exchange

Commodity futures Price quoted by relevantexchange

OTC derivatives

Actively traded OTC Rates quoted by marketinstruments: makers

Based on best estimate ofIn all other cases market prices as described

in (2) above

Some more Concepts: The market value offorward financial derivatives contract is derivedfrom the difference between the agreed-uponcontract price of an underlying item and theprevailing market price (or market price expectedto prevail) of that item, times the notionalamount, approximately discounted. The notionalamounts - sometimes described as the nominalamount - is the amount underlying a financialderivatives contract that is necessary forcalculating payments or receipts on the contract.This amount may or may not be exchanged. Inthe specific case of a swap contract, the marketvalue is derived from the difference between theexpected gross receipts and gross payments,appropriately discounted; that is, its net presentvalue. The market value for a forward contractcan therefore be calculated using availableinformation – market and contract prices for theunderlying item, time to maturity of the contract,the notional value, and market interest rates.From the viewpoint of the counter parties, thevalue of a forward contract may become negative(liability) or positive (asset) and may change bothin magnitude and direction over time, dependingon the movement in the market price for theunderlying item. Forward contract settled on adaily basis, such as those traded on organizedexchanges - and known as futures - have amarket value, but because of daily settlement itis likely to be zero value at each end-period.

The price of an option depends on the potentialprice volatility of the price of the underlying item,the time to maturity, interest rates, and thedifference between the contract price and themarket price of the underlying item. For tradedoptions, whether they are traded on an exchangeor not, the valuation should be based on theobservable price. At inception the market valueof a non-traded option is the amount of thepremium paid or received. Subsequently non-traded options can be valued with the use ofmathematical models, such as the Black-Scholesformulae, that take account of the factorsmentioned above that determine option prices.In the absence of a pricing model, the pricereported for accounting or regulatory purposesmight be used. Unlike forwards, options cannotswitch from negative to positive value, or vice

153

Banking Statistics

versa, but they remain an asset for the ownerand a liability for the writer of the option.

Some Examples for the Calculation of Market orFair Values of Derivative Contracts: The followingexamples indicate how to calculate the marketor fair value of various derivative contracts:

For a forward, a contract to purchase USDagainst EUR at a forward rate of 1.00 wheninitiated has a positive market value if the EUR/USD forward rate at the time of reporting forthe same settlement date is lower than 1.00. Ithas a negative market value if the forward rateat the time of reporting is higher than 1.00, andit has a zero market value if the forward rate atthe time of reporting is equal to 1.00.

For swaps, which involve multiple (andsometimes two-way) payments, the market or fairvalue is the net present value of the paymentsto be exchanged between the counter partiesbetween the reporting date and the contractsmaturity, where the discount factor to be appliedwould normally reflect the market interest ratefor the period of the contract’s remainingmaturity. Thus, a fixed/floating swap which atthe interest rates prevailing at the reporting dateinvolves net annual receipts by the reporter ofe.g. 2% of the notional principal amount for thenext three years has a positive marked to market(or replacement) value equal to the sum of threenet payments (each 2% of the notional amount),discounted by the market interest rate prevailingat the reporting date. If the contract is not inthe reporter’s favour (i.e., the reporter would haveto make net annual payments), the contract hasa negative net present value.

Unlike forwards or swaps, OTC options have amarket or fair value at initiation which is equalto the premium paid to the writer of the option.Throughout their life, option contracts can onlyhave a positive market or fair value for the buyerand a negative market or fair value for the seller.If a quoted market price is available for a contract,the market value to be reported for that contractis the product of the number of trading units ofthe contract multiplied by that market price. If aquoted market price is not available, the marketor fair value of an outstanding option contract atthe time of reporting can be determined on thebasis of secondary market prices for options with

the same strike prices and remaining maturitiesas the options being valued, or by using optionpricing models. In an option pricing model,current quotes of forward prices for the underlying(spot prices for American options) and the impliedvolatility and market interest rate relevant to theoption’s maturity would normally be used tocalculate the market values. Options sold andpurchased with the same counter party shouldnot be netted against each other, nor shouldoffsetting bought and sold options on the sameunderlying. The format for reporting of derivativesfrom branch to HO/PO has been discussed inparagraph 3.24.

Ensuring the data quality: Due to unavailabilityof secondary data on derivatives, it will not bepossible to ensure/cross-check the coverage atRBI level. The reporting banks/branches arerequired to ensure the correctness/coverage/quality of data before submitting the same tothe RBI.

REPORTING BY BANK HEAD/PRINCIPALOFFICES TO RBI:

The head/principal offices of banks are requiredto submit consolidated amount for each country(ultimate risk country) across all derivatives(forwards, swaps, FRA, futures, options, creditderivatives, etc.,). The amount shall be thepositive market value representing financialclaims and denominated in equivalent USD usingclosing FEDAI spot rate on relevant reportingdates. The information on subsidiaries is notrequired to be reported unless there is an explicitguarantee provided by the parent.

The head/principal offices of banks are requiredto collate counter party and contract wise dataon derivatives supplied by the branches alongwith such data available at head office level andthen do netting for a counter party where specificlegally enforceable bilateral netting arrangementsuch as International Swaps and DerivativeAssociation (ISDA) master agreement, etc., exists.An illustration to the mechanism of netting hasbeen provided at the end of this Annex. Afternetting, wherever necessary, only positive marketvalues representing financial claims of the bankare to be reported.

154


Counter Party-wise Netting and Reporting by SBI

Counter Currency Country of Country of Nettingparty of Counter Ultimate of Remark

Settlement Party Risk values

(1) (2) (3) (4) (5) (6)

CP1 USD US US +100-10=+90 Should be Reported

CP1 JPY IN US -75+50=-25 Should NOT be Reported

CP1 USD IN US -10 Should NOT be Reported

CP2 GBP SG IN +30-50=-20 Should NOT be Reported

CP2 USD IN IN +80 Should be Reported

CP3 USD US IN -30 Should NOT be Reported

CP3 GBP GB IN +60 Should be Reported

Mechanism of Netting: Derivative contracts entered by SBI branches worldwide

Reporting Currency ofCountry of Country of

Type ofMTM

BranchCounter-party

SettlementCounter Ultimate Value

Party Riskderivative

(in USD)

(1) (2) (3) (4) (5) (6) (7)

New York CP1 – Citibank, New York USD US US FX Forward +100

New York CP1 – Citibank, Tokyo USD US US IRS –10

Mumbai CP1 – Citibank, Kolkata JPY IN US FCY IRS -75

Mumbai CP1 – Citibank, Mumbai JPY IN US FX Forward +50

Mumbai CP1 – Citibank, Delhi USD IN US FCY IRS –10

Mumbai CP2 – ICICI Bank, Singapore GBP SG IN FX Forward +30

Kolkata CP2 – ICICI Bank, Singapore GBP SG IN FX Option –50

Mumbai CP2 – ICICI Bank, Mumbai USD IN IN IRS +80

Kolkata CP3 – SBI, New York USD US IN Currency -30Swap

Kolkata CP3 – SBI,London GBP GB IN FX Option +60

Note: It has been assumed that there exist specific legally enforceable bilateral netting arrangement betweenSBI and each of the counter-parties mentioned at column no. (2). However, if there exist no such agreementwith a particular counter-party then amounts for all contracts with that counter party with positivemarket values should be added and reported without netting with negative values.

155

Banking Statistics

Annex 2.11

PROFORMA – I

Statement of New Branch/office/NAIO as and when opened:

Items

1. (a) Name of the Commercial Bank/Other Financial Institution/ Co-operative institution:

(b) Proforma for:

Branch/Office of a Bank ( )

Not Administratively Independent Office (NAIO) ( )

Branch/Office of Other Financial Institution ( )

(Put tick mark (�) in appropriate box)

(c) Uniform Codes: Part-I (7/9 digits) :

Part-II (7 digits) :

(To be allotted by RBI)

2. (a) Name of the new Branch/Office/NAIO:______________________________

(b) RBI Reference No._______________

and Reference Date: / /

Day Month Year

(c) Licence Number:_______________

(as obtained from RBI)

(d) Date of Licence: / /

Day Month Year

(e) Whether it is a case of Re-Validation of licence:

Yes () No ( )

If yes, give the date of re-validation:

/ /

Day Month Year

3. Date of opening of the / /

New Branch/office/NAIO: Day Month Year

4. Postal address:

4.1 Name/Municipal Number of

the building (if any): _______________________________

4.2 Name of the Road (if any): __________________________

4.3 (a) Name of the Post Office: ________________________

(b) Pin Code:

4.4 Name of the locality within a Centre (Revenue unit): _____________________________(See explanation)

4.5 Name of Tehsil/Taluka/Sub-Division: _________________

156


4.6 Tel.No. /Telex No. (Including STD code): ____________

4.7 Fax No.: ________________

4.8 E-mail Address: _____________________

5 (a) Name of the centre(revenue village/town/city/Municipality/Municipal Corporation) within thelimits of which branch/office is located: ________________

(b) Name of Community Development Block/Development Block/Tehsil/Taluka/Sub-Division/Mandal/Police Station:______________________

(c) Name of the District: _____________________

(d) Name of the State: ____________________

(e) Population of the Centre (revenue unit) as per latest Census report: ________________

6. Is/are there any other administratively independent bank branch(es)/office(s) other than yourbranch/office/NAIO in your center: Yes: ( ) No: ( )

( (�) in appropriate box )

7. (a) Business Status of the new branch/office/NAIO :

Code: Status Name:- ______________________

(b) In case of NAIO, supply the following details:

(i) Name of the base branch/office: ____________________

(ii) Uniform code numbers of the base branch/office

Part-I (7 digits) :

Part-II (7 digits):

8. (i) (a) Status of Central Government Business: (Put tick mark (�) in appropriate box)

Type of Central Government Business

(1) ( ) No Govt. Business

(2) ( ) Direct Taxes

(3) ( ) Departmentalised Ministries Account (DMA)

(4) ( ) Pension

(5) ( ) Bond Issue

(6) ( ) Others (Specify, if any): ________________

(b) Status of State Government Business (i.e. Treasury/Sub-treasury business): (Put tickmark (�) in appropriate box)

Type of Treasury/Sub-Treasury Business (State Govt.)

(1) ( ) No Govt. Business

(2) ( ) Treasury Business

(3) ( ) Sub-Treasury Business

(4) ( ) Pension

(5) ( ) Bond Issue

(6) ( ) Others (Specify, if any): ________________

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Banking Statistics

(ii) Whether a currency chest is attached to this branch/office: Yes ( ) No ( )

(A) If “Yes” then state:

(a) The type of currency chest: A ( ) B ( ) C ( )

(put a tick mark (�) in appropriate box)

(b) Date of establishment / /

of currency chest: Day Month Year

(c) Currency chest code Number:

(8- digit Code allotted by Department of Currency Management (DCM) is to be written)

(d) Mention type of area in which currency chest is located: (State “type of area” code: See

the explanation) Code: Type of Area: ________________

(B) If “NO” then, supply particulars of the nearest branch/office having currency chest facility:

(a) Bank Name: ____________________

(b) Branch Name: ______________________

(c) Part-I of Uniform code:

(d) Distance (in Km.): ______________

(e) Centre Name: ____________________

(iii) Whether there is a repository attached to this branch/office? Yes ( ) No ( )(put a tick mark (�) in appropriate box)

(iv) Whether a small coin-depot is attached to this branch/office? Yes ( ) No ( )(Put a tick mark (�) in appropriate box)

(v) Whether any NAIO is attached to the branch having Currency Chest/Repository/Small Coin-depot facility? (Put a tick mark (�) in appropriate box) Yes () No ( )

9. Nature of Business conducted by the branch/office/NAIO:

(Put tick mark (�) in appropriate box/boxes)

Name

(1) ( ) Banking Business

(2) ( ) Merchant Banking Business

(3) ( ) Foreign Exchange

(4) ( ) Gold deposit

(5) ( ) Insurance

(6) ( ) Administrative/Controlling Office

(7) ( ) Training Centre

(8) ( ) Others (Please specify, if any) _______________________

158


10. (a) Authorised Dealer Category of the branch/office: A ( ) B ( ) C ( )

(Put a tick mark (�) in appropriate box)

(b) Date of Authorisation: / /

Day Month Year

(c) In the case of ‘C’ Category office, write name and uniform code numbers of ‘A’ or ‘B’ Categorybranch/office through which its foreign exchange transactions are settled:

(i) Name of the branch/office: _____________________

(ii) Uniform code Numbers of the branch/office:

Part-I : Part-II:

(7 digits) (7 digits)

11. Technological facility of Branch/Office:


Technological Facility

(1) ( ) Not yet Computerised

(2) ( ) Partially Computerised

(3) ( ) Fully Computerised

12. Communication Facility available in the Branch/Office/NAIO:


Communication Facility

(1) ( ) NO NETWORK

(2) ( ) INFINET

(3) ( ) INTERNET

(4) ( ) INTRANET

(5) ( ) CORE BANKING SOLUTION

(6) ( ) Others (Please specify, if any) _____________

13. Magnetic Ink Character Recognition

(MICR Code) of the branch/office: _____________________

14. Any other particulars (please specify): _______________

15. For RBI use only:

(a) AD Region Office Code:

(b) Census Classification Code:

(c) Full Postal Address:

159

Banking Statistics

PROFORMA – II

Statement of change in Status/Merger/Conversion/Closure etc. of Existing Branch/office/NAIO asand when effected.

Name of the Bank/Other Financial Institution/Co-operative institution:-

A. Change in Status/ A.D.Category/Nature of Business/Postal address of Branch/office/NAIO:

1. Name of the branch/office/NAIO (See explanation in item no.2(a)):

(a) Old Name: __________________

(b) Current Name: ____________________________

(c) Date of Change in Name: / /

Day Month Year

2. Uniform Code (Existing):

(a) Part-I (7/9 digits) :

(b) Part-II (7 digits) :

3. Change in Business status of the Branch/office/NAIO (See explanation in item no.7(a)):

(a) Old Status Name: _________________________ Code :

(b) Current Status Name: _____________________ Code :

(c) Date of Change in status (if any): / /

Day Month Year

4. Change in Nature of Business:


(a) Old Name Current

(1) ( ) Banking Business ( )

(2) ( ) Merchant Banking Business ( )

(3) ( ) Foreign Exchange ( )

(4) ( ) Gold deposit ( )

(5) ( ) Insurance ( )

(6) ( ) Administrative/Controlling Office ( )

(7) ( ) Training Centre ( )

(8) ( ) Others (Please specify, if any) ______ ( )

(b) Date of Change in nature of business (if any): / /

Day Month Year

160


5. (a) Change in Technological Facility of the Branch/office/NAIO:


Old Technological Facility Current

(1) ( ) Not yet Computerised ( )

(2) ( ) Partially Computerised ( )

(3) ( ) Fully Computerised ( )

(b) Date of Change in technological Facility: / /

Day Month Year

6. (a) Communication Facility of Branch/Office/NAIO:


Old Communication Facility Current

(1) ( ) NO NETWORK ( )

(2) ( ) INFINET ( )

(3) ( ) INTERNET ( )

(4) ( ) INTRANET ( )

(5) ( ) CORE BANKING SOLUTION ( )

(6) ( ) Others ( )

(Please specify, if any)______________

Date of Change in Communication Facility: / /

Day Month Year

7. State Authorised Dealer Category of the Branch/office:

(a) Old Category : _________________________

(b) New/Changed Category : _________________________

Further, put tick mark (�) in appropriate box :

Upgraded ( ) Degraded ( ) Newly Authorised ( )

(c) Date of Upgradation/Degradation/Authorisation:

/ /

Day Month Year

(d) If a branch doing general banking business is assigned additional responsibility of handlingforeign exchange business and belongs to AD Category “C”, then give uniform code number ofthe Link Branch/office through which its transactions are reported:

Part-I (7 digits) :


(e) If a link office of an existing “C” category branch is changed, then provide Part-I & II codes ofthe new link office:

Part-I (7 digits) :


161

Banking Statistics

(f) If “A”/”B” category AD branch is downgraded to “C” category, then give uniform code numberof the Link Branch/office through which the transactions of the downgraded “C” category ADbranch is reported:

Part-I (7 digits) :


(g) If ‘A’/’B’ category AD branch, which has been working as a link office to one or more ‘C’category AD branch(es), is downgraded to “C” category AD branch, then provide Part – Icode(s) of the AD branch(es) which has/have been assigned the link office role to the said ‘C’category branch(es):

UCN of ‘C’ category branch UCN of Link office

Part - I : Part - I :



(If the list of “C” category branches is large, then enclose the list)

(h) If a branch doing general banking business alone/”C” category AD branch is assigned orupgraded to “A”/”B” category AD branch, then part-I code of all “C” category branches, whichwill be linked to the newly upgraded AD branch should be listed:

Part-I (7 digits) :

Part-I (7 digits) :

Part-I (7 digits) :


8. Details in respect of change, if any, in the status of currency chest/ repository/ coin-depot/Govt. Business, etc. (including opening/ shifting/ conversion/ closure). In all these cases ofshifting/conversion/ closure please mention the date also:

(a) (i) Central Government Business:


Old Type of Govt. Business New

(1) ( ) No Govt. Business ( )

(2) ( ) Direct Taxes ( )

(3) ( ) Departmentalised Ministries Account (DMA) ( )

(4) ( ) Pension ( )

(5) ( ) Bond Issue ( )

(6) ( ) Others (specify, if any): ________________ ( )

(ii) Date of Change: / /

Day Month Year

162


(b) (i) Treasury/ Sub-Treasury Business (State Govt. Business):


Old Type of Treasury/Sub-Treasury Business New

(1) ( ) No Govt. Business ( )

(2) ( ) Treasury Business ( )

(3) ( ) Sub-Treasury Business ( )

(4) ( ) Pension ( )

(5) ( ) Bond Issue ( )

(6) ( ) Others (Specify, if any):_____________ ( )

(ii) Date of Change: / /

Day Month Year

(c) State Currency Chest Type: Old: ( ) Current: ( )

Date of Change: / /

Day Month Year

(d) If authorised newly for currency chest, then indicate

(i) type of currency chest (put tick (3) mark in appropriate box):

A ( ) B ( ) C ( )

(ii) Date of authorisation: / /

Day Month Year

(iii) Currency chest code Number:

(8- digit Code allotted by Department of Currency Management (DCM) is to be written)

(iv) Mention type of area in which currency chest is located: (State “type of area” code: Seethe explanation)

Code: Type of Area: ________________

(e) Repository: ______________________

(f) Coin-Depot: ______________________

9. Full postal address: (See explanations in item nos. 4.1 to 4.8)

(i) Old

(a) Name/Municipal Number of the building (if any): ___________

(b) Name of the Road (if any): ________________

(c) (i) Name of the Post Office: _________________

(ii) Pin Code:

(d) Name of the locality within the Centre (Revenue unit): ______

(e) Name of the Centre (Revenue unit): _________________

(f) Name of Community Development Block/Development Block/Tehsil/ Taluka/Sub-Division/Mandal/Police Station:_______________

(g) Tel.No./Telex No. (Including STD code): __________________

(h) Fax No.: ______________________

(i) E-mail Address: _____________________

163

Banking Statistics

(ii) Current

(a) Name/Municipal Number of the building (if any): ___________

(b) Name of the Road (if any): ____________________

(c) (i) Name of the Post Office: _______________________

(ii) Pin Code:

(d) Name of the locality within the Centre (Revenue unit):_____

(e) Name of the Centre (Revenue unit): _________________

(f) Name of Community Development Block/Development Block/Tehsil/ Taluka/Sub-Division/Mandal/Police Station:___________________

(g) Tel. No. /Telex No. (Including STD code): __________________

(h) Fax No.: ______________________

(i) E-mail Address: ____________________

(iii) Date of change of address: / /

Day Month Year

10. (i) If the branch/office/NAIO is relocated to a different centre (revenue unit) furnish details ofthe current centre: (See explanations in item nos. 2(a), 5(a), 5(b) and 5(e) for (a), (b), (c) and(f) respectively.)

(a) Branch/Office/NAIO Name: _____________________________

(b) Revenue Unit (Centre Name): _______________________

(c) Name of Community Development Block/Development Block/Tehsil/ Taluka/Sub-Division/Mandal/Police Station:_______________

(d) District Name: ______________________________

(e) State Name: ______________________________

(f) Population (as per latest Census) of the Centre: _______________

(ii) Date of change of centre: / /

Day Month Year

11. If the branch/office/NAIO is relocated to a different centre, give the reasons forrelocation:_______________________________

(a) Licence No.:__________________

(b) Licence suitably amended on / /

Day Month Year

by RBI Regional Offices at __________________________

(c) Ref. No. & Date of RBI Central Office’s approval:

Ref. No.: _______________________ Date: / /

Day Month Year

12. In case of change/closure of base branch/office of an NAIO provide:

(a) Part – I code of old base branch/office:

(b) Part – I code of new base branch/office:

13. Any other particulars: __________________________________

164


B. Closure/Merger/Conversion of the Branch/Office/NAIO:

1. Advice for Closure ( ) Merger ( ) Conversion ( )

(Put tick mark (�) against appropriate box)

2. Branch/Office/NAIO Name (See explanation in item no.2 (a)): ___________

3. Uniform Codes (See explanation in item no.1(b)):

Part - I : Part - II :

4. (a) Postal address of branch/office/NAIO:

(See explanation in item nos. 4.1 to 4.8)

(i) Name/Municipal Number of the building (if any):____________

(ii) Name of the Road (if any): _______________________

(iii) (A) Name of the Post Office: ______________________

(B) Pin Code:

(iv) Name of the locality within the Centre(Revenue unit): ___

(v) Name of Community Development Block/Development Block/Tehsil/Taluka/Sub-Division/Mandal/Police Station:_____

(vi) Tel.No. /Telex No. (Including STD code): _________________

(vii) Fax No.: _________________

(viii) E-mail Address: __________________________

(b) Centre Name: ___________________________ (See explanation in item no.5(a))

(c) District Name:______________________

(d) State Name: ________________________

(e) Population of the centre (revenue unit) as per latest Census Report:_____ (See explanation initem no.5(e))

5. Date of Closure/Merger/Conversion: / /

Day Month Year

6. RBI reference No. & date of approval:

Reference No.: _________________ Date: / /

Day Month Year

7. Reason for Closure/Merger/Conversion: ______________________

8. Licence surrendered for _______________ on / /

(Name of branch/office/NAIO) Day Month Year

to RBI Regional Office at _________________________________

9. In case of closure/merger of ‘A’/’B’ category AD branch, which has been working as a link officeto one or more ‘C’ category AD branch(es), provide Part – I code of the AD branch(es) which has/have been assigned the link office role to the said ‘C’ category branch(es):

UCN of ‘C’ category branch UCN of Link office





165

Banking Statistics

10. If the branch/office is converted into NAIO then type of the NAIO: (See explanation in item

no.7(a)(IV)) Status Name: ___________________________ Code:

11. Particulars of the Base/Absorbing Branch/office:

(a) In case of Conversion into NAIO:

i) Base Branch/Office Name: __________________________________

ii) Uniform Codes: Part – I (7 digits) :

Part – II (7 digits) :

iii) Full postal address: ______________________________

(b) In case of Merger/Absorption of branches/offices/NAIOs:

i) Absorbing Branch/Office Name: __________________________________




(c) If a branch, which is working as a base branch for some NAIOs, is closed/converted intoNAIO/merged with another branch, then the base branch details of the NAIOs, which wereearlier linked to the closed/converted/merged branch, should be provided:

i) Base Branch/Office Name: __________________________________




166


I. Proforma-I is submitted either on the dayof opening of branch/office/NAIO orafterwards but not before opening ofbranch/office/NAIO.

II. Proforma-I is meant for all types of newlyopened bank branches/offices/NAIOs andproforma-II is meant for reporting changein status/postal address, closure/ merger/conversion/ relocation /upgradation, etc. ofexisting bank branches/offices /NAIOs.

III. Uniform code numbers had been so longassigned to administratively independentoffices/branches, submitting separatereturns to Reserve Bank of India (Seeexplanation at 7(b)). Recently, it has beendecided to allot 9-digit uniform codes to NotAdministratively Independent Offices (NAIOs- temporary offices), such as stand-aloneATMs/extension counter /satellite office/representative office/cash counter/inspectorate/ collection counter/mobileoffice/Airport counter/ Hotel counter /Exchange Bureau. However, Proformae forTemporary Office opened at the site of afair/exhibition, etc. should not be sent toDESACS.

IV. Public Sector Banks, which have beenallowed to assign Part I code to their newbranches/offices/NAIOs should strictlyfollow the instruction mentioned at IIIabove, at the time of forwarding Proforma-Ito RBI.

V. Upgradation of an NAIO into a full-fledgedbranch/office should be treated as closureof NAIO and opening of a branch/office.Accordingly, both Proforma – II for NAIOclosure and Proforma – I for upgradationinto a branch/office should be submitted.

VI. Alternatively, if a branch/office is convertedinto NAIO, then Proforma – II for closure of

DETAILS OF PROFORMAE – I & II FOR BANKS’ USE

the branch/office and Proforma – I forconversion/opening of the NAIO aresubmitted.

VII. Proforma- I & II are not accepted forallotment of Part-I & Part-II/revision of Part-II code unless all items in the Proformaeare filled up properly.

EXPLANATIONS OF ITEMS IN PROFORMA-I

Item No.1(c):

Public sector banks (SBI and its 7 Associates,19 Nationalised Banks & IDBI Ltd.) are allowedto assign 7/9-digit Part-I Code Numbers only totheir branches/offices/NAIOs and for otherbanks RBI (DESACS) allots both Part-I & Part-IIcodes. Each NAIO is linked to some independentbranch. Last two digits (8th & 9th digits from theleft) of Part – I code for NAIOs follow the 7-digitPart – I code of the base branch.

UCN of branches/offices of banks comprises twoparts as Part-I code and Part-II code of 7 digitseach; two additional digits are assigned to Part– I code of NAIOs.

Part-I code is defined as follows:

• for branches/offices/NAIOs of commercialbanks and other financial institutions:

first three digits from the left stand for bankcode

next four digits stand for branch code


• for branches/offices/NAIOs of state/districtcentral co-op. banks, state/central landdevelopment banks:

first four digits from the left stand for bankcode

next three digits stand for branch code


167

Banking Statistics

• for branches/offices/NAIOs of other co-op.banks, salary earners’ societies, statefinancial corporations and tours, travels,finance & leasing companies:

first five digits from the left stand for bankcode

next two digits stand for branch code


Part-II code, irrespective of different categoriesof banks, is defined as follows:

first three digits from the left stand for districtcode

next three digits stand for centre code withinthe district

last single digit stands for population rangecode.

Relationship between population range code andpopulation group code is shown below:

Relationship between population range code andpopulation group code is shown below:

Last digitof Part II Popula- Popula-

of the Uni- Population tion tionform Code Range Group GroupNumber Code

(PopulaitonRange code)

1 Up to 4999Rural 1

2 5000 to 9999

3 10,000 to 19,999

4 20,000 to 49,999 Semi-Urban 2

5 50,000 to 99,999

6 1,00,000 to 1,99,999

7 2,00,000 to 4,99,999 Urban 3

8 5,00,000 to 9,99,999

9 10 lakhs and above Metropolitan 4

Item No.2(a):

The name of the Branch/Office/NAIO iswritten.

Item No.2(b):

Reference letter number and date ofauthorization/approval issued by RBI ismentioned.

Item No.2(c):

The Licence No., if already available (as obtainedfrom concerned Regional Offices of RBI) is to bewritten; otherwise the same should becommunicated later on along with UniformCodes.

Item No.2 (d):

The exact date (including month & year) oflicence is indicated.

Item No.2 (e):

In case the branch/office/NAIO is opened afterexpiry of one year from the date of issuing oflicence, please indicate whether licence was re-validated or not and if revalidated please mentionthe date of re-validation.

Item No. 3:

The exact date of opening including month &year is mentioned.

Item No. 4.1 to 4.3 and 4.6 to 4.8:

The names/numbers/codes are written againstthe appropriate item number. PIN code againstitem No. 4.3(b) should be indicated. In respectof mobile office and mobile ATM detailed addressof the base branch/ office should be reported.

Item No. 4.4:

The name of the locality i.e. the exact place,where the branch/office /NAIO is located, ismentioned. The name of the locality may be thename of village in case the branch/office/NAIOis opened in a village. In case of mobile office ormobile ATM, respective details of the basebranch/office are reported.

Item 4.5 & 5(b):

The names of the Tehsil/Taluka/Sub-divisionand the Community Development Block withreference to centre name stated at item 5(a)

168


are indicated at item Nos. 4.5 and 5(b)respectively.

This may not be applicable in the cases ofmetropolitan centres.

In case of mobile office or mobile ATM, respectivedetails of the base branch/office should bereported.

Item No.5 (a):

The name of the Village/Town/City/Municipality/Municipal Corporation under thejurisdiction of which the locality mentioned atitem No.4.4 is included, is written. The nameof the village is to be written if the branch/office/NAIO is opened in a village, which is a revenueunit/centre. In case of mobile office or mobileATM, respective details of the base branch/officeare reported.

Caution:

If the name of the centre in item no. 5(a) is notwritten correctly, then the branch/office/NAIOmay get wrongly classified with incorrect Part-IIcode. The name of Panchayat/Block/Tehsil/District, etc. should not appear against item Nos.4.4 & 5(a) unless the branch/office/NAIO islocated in the head quarter of the Panchayat/Block/Tehsil/District.

Item No. 5(e): (refer Item No. 5(a) also)

Latest Census population figure of the Centre(revenue unit) where the branch/office/NAIO islocated should be stated. Population of whole ofPanchayat/Block/tehsil/district, etc., are not beconsidered. Population of a revenue centre canbe obtained from Census Handbook/LocalCensus Authority or from local administrationsuch as District Collector/ Tehsildar/BlockDevelopment Officer, etc., and a certificate (inoriginal) to this effect, covering following twoaspects, should be collected from the concernedlocal administration and forwarded:

(i) Name of the revenue centre, where thebranch/office/NAIO under reference islocated.

(ii) Population of the said revenue centre as perthe latest census report.

Item No. 6:

An office is administratively independent, if itmaintains separate books of accounts and isrequired to submit one or more BSR returns toRBI.

If there is no administratively independentbranch/office of a regional rural bank or of anyother commercial/co-operative bank in the centre(revenue unit), as referred to at item 5(a) above,within the limits of which the new branch/officeis located, then put tick mark (Ö) against “No”,otherwise put tick mark (Ö) against “Yes”.

Item No.7 (a):

The names & respective codes of different types(business status) of branches/ offices/NAIOsare listed in categories I to IV below. Theappropriate status name & corresponding codeis written.

As the list is not exhaustive, please state exactstatus of the office/ branch/NAIO under “Anyother branch/office/NAIO “ category:

I. IN CASE OF ADMINISTRATIVE OFFICE

CODE STATUS NAME

(01) Registered Office

(02) Central/Head Office/Principal Office

(03) Local Head Office

(04) Regional Office/Area Office/Zonal Office/Divisional Office/ Circle Office

(05) Funds Management Office

(06) Lead Bank Office

(07) Training Centre

(09) Any other administrative office (notincluded above, pl. specify)

II. IN CASE OF GENERAL BANKINGBRANCH

CODE STATUS NAME

(10) General Banking Branch

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Banking Statistics

III. IN CASE OF SPECIALISED BRANCH

(A) Agricultural Development/FinanceBranches

(11) Agricultural Development Branch (ADB)

(12) Specialised Agricultural Finance BranchHi-Tech.(SAFB Hi-tech)

(13) Agricultural Finance Branch (AFB)

(B) S.S.I./Small Industries and SmallBusiness Branches

(16) Small Business Development Branch/office

(17) Small Scale Industries Branch (SSI)

(18) Small Industries & Small BusinessBranch (SIB)

(C) Industrial/Corporate Finance/LargeAdvances Branches

(21) Industrial Finance Branch (IFB)

(22) Corporate Finance Branch (CFB)

(23) Hire-Purchase and Leasing FinanceBranch

(24) Industrial Accounts Branch

(25) Large Advances Branch

(26) Business Finance Branch

(27) Mid Corporate Branch

(D) Asset Recovery Management/IndustrialRehabilitation Branches

(30) Asset Recovery Management ServicesBranch (ARMS)

(31) Industrial Rehabilitation Branch

(E) Capital Market/Custodial Services/Merchant/Mercantile Banking Branches

(35) Capital Market Services Branch (CMS)

(36) Custodial Services Branch

(37) Merchant Banking Branch

(38) Mercantile Banking Branch

(F) Overseas/International Banking Offices/Branches

(41) International Banking Branch/office

(42) Overseas Branch

(43) International Business Branch/Office/Centre

(44) International Exchange Branch

(G) Commercial/Personal Banking Branches

(47) Non-Resident Indian (NRI) Branch

(48) Housing Finance Branch

(49) Personal Banking Services Branch

(50) Consumer Finance Branch

(51) Specialised Savings Branch

(52) Commercial and Personal BankingBranch

(53) Specialised Commercial Branch

(54) Draft Paying Branch

(55) Professionals Branch

(56) Locker Branch

(57) Specialised Trading Branch

(58) Diamond Branch

(59) Housing Finance Personal BankingBranch

(H) Collection & Payment/Quick(Fast)Service/STARS Branches

(63) Service Branch/Clearing Branch/Cell

(64) Collection and Payment Services Branch

(65) Quick Collection Branch

(66) Fast Service Branch

(67) Speedy Transfer and Realisation Services(STARS) Branch

170


(I) Other type of Specialised Branches

(71) Treasury Branch (Government Business)

(72) Stock Exchange Branch

(73) Auto-Tech Branch

(74) Fund Transfer Services (FTS) Branch

(75) Weaker Sections Branch

(76) Security Services Branch

(77) Specialised Woman EntrepreneursBranch

(78) Specialised Cash Management ServicesBranch

(79) Microsafe Branch for Self Help Groups

(80) Any other category of specialised branch/office (not included above).

IV. IN CASE OF NON-ADMINISTRATIVELYINDEPENDENT OFFICE(NAIO)

(85) Extension Counter

(86) Satellite Office

(87) Mobile Office

(88) Service Branch**

(89) Mobile ATM

(90) On-site ATM

(91) Off-site ATM

(92) Representative Office

(93) Exchange Bureau

(99) Any Other NAIOs (not included above, pl.specify)

** Temporary Office not maintaining separatebooks of accounts.

Item No. 7(b):

NAIO are Offices for which separate books ofaccounts are not maintained and not requiredto submit BSR returns to RBI. Name of the basebranch/office and its Uniform Code Numbers areto be provided with which the accounts ofNAIO (s) will be maintained.

Item No. 8(ii)(A)(d):

The appropriate Code among the options listedbelow is indicated:

Code: Type of Area

(0) Normal area

(1) Border area

(2) Disturbed area (High Risk)

(3) Area affected by natural calamities (flood/earth-quake prone area, etc.)

(4) Area not having adequate transportfacility due to snowfall, etc.

171

Banking Statistics

Annex 2.12

SUPERVISORY DATA PUBLISHED IN RBI PUBLICATIONS

Sl. Table Table Name PageNo. No. No.

Annual Report – 2004-05

1 5.1 Select Financial Indicators 146

2 5.2 Scheduled Commercial Banks: Frequency Distribution of CRAR 146

3 5.5 Net NPAs’ to Net Advances of Scheduled Commercial Banks 148

4 5.6 Scheduled Commercial Banks – Performance Indicators 149

5 5.7 Operational Results of Scheduled Commercial Banks – Key Ratios 150

6 5.8 Operational Results of Scheduled Commercial Banks 150

Report on the Trend and Progress of Banking in India – 2004-05

III.9 Retail Portfolio of Banks 71

III.31 Classification of Loan Assets – Bank Group-wise 92

III.32 Sector-wise NPAs – Bank Group-wise 92

III.34 Investment Fluctuation Reserves – Bank Group-wise 94

III.35 Scheduled Commercial Banks – Component-wise CRAR 94

III.36 Capital Adequacy Ratio – Bank Group-wise 95

III.37 Distribution of Scheduled Commercial Banks byCapital Adequacy Ratio 95

III.59 Profile of Local Area Banks 107

III.60 Financial Performance of Local Area Banks 107

Appendix Tables

III.27 (A&B) Non-Performing Assets – Sector-wise 288; 289

III.31 Shareholding Pattern of Scheduled Commercial Banks 296

Statistical Tables Relating to Banks in India

7.1 Bank Group-wise Classification of Loan Assets

7.2 Composition of NPAs of Public Sector Banks 1997 to 2005

11.6 Bank Group-wise Risk Weighted Assets

B6 Bank-wise Non-Performing Assets (NPAs) of ScheduledCommercial Banks - As at end March 2005

172


1, 5, 9,10

2, 6, 11

3, 7, 12

4, 8, 13

14

15

16

Annex 2.13

A: PART I - CO-OPERATIVE CREDIT SOCIETIES

TABLE No. TABLE NAME CONTENTS

State Co-operative Banks/Central Co-operative Banks/Industrial Co-operative Banks –Number of Branches,Membership, Liabilities, Assetsand Operations

State Co-operative Banks/Central Co-operative Banks/Industrial Co-operative Banks –Purpose-wise classification ofLoans and Advances Issued(including cash credit andoverdrafts)

State Co-operative Banks/Central Co-operative Banks/Industrial Co-operative Banks –Purpose-wise classification ofLoans and Advances Outstanding(including cash credit andoverdrafts)

State Co-operative Banks/Central Co-operative Banks/Industrial Co-operative Banks –Classification of Overdues – ByPeriod,

Primary Agricultural CreditSocieties – Number, Membershipand Coverage

Primary Agricultural CreditSocieties – Liabilities, Assets andOperations

Primary Agricultural CreditSocieties – Purpose-wiseclassification of Loans andAdvances Issued

No. of Offices, Capital, Reserves, Deposits,Working Capital, Investments, Loans andadvances issued, outstanding and overdue,Profit/Loss, Cost of Management, etc.

The loans actually disbursed by the SCBs toDCCBs/Societies taking into account thepurposes of the limits under which drawals.

The purpose-wise classification of loansoutstanding has been given as per the books ofthe banks.

Classification of loans and advances overduetogether with the number of defaulters by period.The figure includes the amounts involved inunrenewed cash credits, overdrafts, billspurchased and discounted but returned unpaidand pending as on 31 March. The due fromsocieties under liquidation have not been treatedas overdue.

No. of Societies – active, dormant etc., no. ofvillages, membership with break-up of membersaccording to size of ownership holdings.

In addition to the main items of the balancesheets of the societies at the end of the year,the operations and other activities undertakenby the societies, viz., Distribution of agriculturalinputs, consumer goods, etc., were also given.

The purpose-wise details of loans advanced havebeen furnished against each type of societiesseparately i.e., PACS (other than FSS andLamps), FSS and LAMPS.

173

Banking Statistics

Annex 2.13 (Contd.)


Primary Agricultural CreditSocieties – Purpose-wiseclassification of Loans andAdvances

Primary Agricultural CreditSocieties – Classification ofOverdues – By Period,

Primary Agricultural CreditSocieties – Crop-wiseClassification of S.T. Advancesmade for SAO

Primary Agricultural CreditSocieties – Classification of LoansIssued, Recovered, Outstandingand Overdues – According to sizeof ownership holding

Primary Agricultural CreditSocieties – Classification of Loansand Advances issued to membersof SC/ST – By purpose,

Primary Agricultural CreditSocieties – Financed byCommercial Banks includingRRBs

Grain Banks – Number,Membership, Liabilities, Assetsand Operations

Primary Co-operative Banks –Number of Branches,Membership, Liabilities, Assetsand Operations

The classification of loans outstanding as at theend of the year according to their purposes havebeen furnished against each type of societies.

Classification of loans and advances overduetogether with the number of defaulters accordingto the period of default. The figure of totaloverdues (which will not include the extendeddues) will be inclusive of the outstandings underunrenewed cash credits and overdrafts.

Details of short-term loans advanced by theprimary agricultural credit societies for foodgrainsand non-foodgrains crops such as wheat, paddy,millets, pulses and others under foodgrains andcotton, oilseeds, sugarcane, jute etc., under non-foodgrains.

The extent of finance provided by the primaryagricultural credit societies to members belongingto different categories, such as land-owningcultivators, landless cultivators (tenant cultivatorsand agricultural labourers) and others (artisans,petty traders, etc

Classification of loans and advances issued bythe PACS to the members of SC/ST under short-term, medium-term and long-term loansaccording to the purpose

The data relate to all those-primary agriculturalcredit societies which have been adopted by thecommercial bank/s, regional rural banksirrespective of whether they (i.e. ceded societies)were financed during the year or not.

‘Grain Banks’ popularly known as ‘grain golas’in certain States such as Orissa, are primaryagricultural credit societies dealing in grain, orpartly in grain and partly in cash. The data isgiven separately for active and dormant grainbanks.

Details relating to number, membership,liabilities and assets in respect of each of thecategories of primary co-operative banks viz. (a)Urban banks, (b) Employees’ Credit Societies and(c) Others.

17

18

19

20

21

22

23

24

174


Annex 2.13 (Contd.)


Classification of loans advanced by the primaryco-operative banks during the year according totheir purposes.

The classification of loans outstanding as at theend of the year according to their purposes.

Classification of loans and advances overduetogether with the number of defaulters accordingto the period of default.

Details relating to number, membership,liabilities and assets in respect of each of thecategories of Non-agricultural credit societies (notcoming under the purview of the B.R. Act, 1949),viz., (a) Urban banks, (b) Employees’ CreditSocieties and (c) Others.

Details of loans and advances issued,Distribution activities, viz., distribution ofconsumer goods, Cost of management, Profit/Loss, etc.

Classification of loans advanced by the primarynon-agricultural credit societies during the yearaccording to their purpose separately for eachtype of societies, i.e., PACS (other than FSS andLamps), FSS and LAMPS.

The classification of loans outstanding as at theend of the year according to their purpose foreach type of societies.

Classification of loans and advances overduetogether with the number of defaulters accordingto the period of default

No. of Branches, Membership, Capital, Reserves,Deposits, Borrowings, Working Capital,Investments, Loans and advances issued,outstanding and overdue, etc.

Loans advanced, recovered, outstanding, overdue,Debentures issued, redeemed, Demand,Collection, Balance, Cost of Management, Profit/Loss, Cost of Management, Dividend declared etc.

Primary Co-operative Banks –Purpose-wise classification ofLoans and Advances Issued – ByPurpose

Primary Co-operative Banks –Purpose-wise classification ofLoans and Advances Outstanding- By Purpose

Primary Co-operative Banks –Classification of Overdues – ByPeriod

Primary Non-Agricultural CreditSocieties - Number, Membership,Liabilities and Assets

Primary Non-Agricultural CreditSocieties - Operations

Primary Non-Agricultural CreditSocieties – Purpose-wiseclassification of Loans andAdvances Issued – By Purpose

Primary Non-Agricultural CreditSocieties – Purpose-wiseclassification of Loans andAdvances Outstanding - ByPurpose

Primary Non-Agricultural CreditSocieties – Classification ofOverdues – By Period

State Co-operative Agricultureand Rural Development Banks -Number, Membership, Liabilitiesand Assets

State Co-operative Agricultureand Rural Development Banks -Operations

25

26

27

28

29

30

31

32

33

34

175

Banking Statistics

Annex 2.13 (Contd.)


The loans actually disbursed by the SCARDBsto the primary societies taking into accountpurpose-wise number of units financed have beenfurnished. Wherever the loans have been directlyissued to individuals, the purpose-wise detailsof loans outstanding against individuals havebeen furnished. Wherever the amount of loansoutstanding at PCARDB Societies and SCARDBin the federal structure are not similar and thepurpose-wise details of loans outstanding atprimary level do not agree with the loansoutstanding at SCARDB level, the purpose-wisedetails of the loans outstanding as available inthe books of SCARDB and its branches havebeen furnished.

The data pertaining to classification of loansissued to individual members according to thesize of ownership (operational holdings) isfurnished in respect of the branches of SCARDBsand/or PCARDBs. The total holdings of theconcerned cultivator, and not the part of holdingswhich is actually mortgaged or charged to theprimary/state land development bank, areaccounted for the purpose of this classification.Further, if a loan has been partly disbursed, theamount actually disbursed is counted for thepurpose of this table.

The loans advanced to the weaker sections ofthe community, i.e., scheduled castes andscheduled tribes and also the purpose-wisedetails of the loans issued are furnished.

No. of Banks, Branches, Membership, Capital,Reserves, Deposits, Borrowings, Working Capital,Investments, Loans and advances issued,outstanding and overdue, etc., Loans advanced,recovered, outstanding, overdue, Demand,

State Co-operative Agricultureand Rural Development Banks –Purpose-wise classification ofLoans and Advances Issued – ByPurpose

State Co-operative Agricultureand Rural Development Banks -Classification of Loans andAdvances Outstanding - ByPurpose

SCARDBs & PCARDBs–Classification of Loans Issued,Recovered, Outstanding andOverdues – According to size ofownership holding

Agriculture and RuralDevelopment Banks (SCARDBs &PCARDBs) – Details ofMembership and Loans Advancedto Members of SC and ST

Agriculture and RuralDevelopment Banks (SCARDBs &PCARDBs) – Details ofMembership and Loans Issued toMembers of SC and ST – ByPurpose,

Primary Co-operative Agricultureand Rural Development Banks –Number,Membership, Liabilities,Assets and Operations

35

36

37 & 41

38

39

40

176


Annex 2.13 (Contd.)


Collection, Balance, Cost of Management, Profit/Loss, Cost of Management, etc.

The data in these tables include the number ofpersons employed by credit societies. The dataare furnished by types of societies in respect ofvarious categories of staff.

Details regarding central and the primarysocieties audited during the year, irrespective ofthe period covered by the audit. The numberreported relates to the societies and not to theyears in respect of which audit was completedduring the year.

Employment in Co-operativeCredit Societies – State-wise &Type-wise

Audit and Audit Classification ofCredit Societies for the year

42 & 43

44

B: PART II – CO-OPERATIVE NON-CREDIT SOCIETIES


1

2

3

4

5

6

7

8

9

10

11

Marketing Societies - Number,Membership, Coverage, Liabilities& Assets

National & State

Central

Primary – Total

General Purpose MarketingSocieties

Fruits & Vegetables MarketingSocieties

Arecanut Marketing Societies

Coconut Marketing Societies

Sugarcane Marketing Societies

Tobacco Marketing Societies

Cotton Marketing Societies

Other Specialised CommoditiesMarketing Societies

No. of Societies, Coverage, Membership, Paid-upCapital, Reserves, Borrowings, Working Capital,Assets, Godowns owned by the Societies,Capacity, Storage, Cold Storages installed by themarketing societies, Business activities, Value ofPurchases, Value of Sales effected as owners,Distribution activities, Processing activities,Manufacturing and Production activities, viz.,Fertilizer Mixture, Pesticides, insecticides, Agriimplements, Seeds, Loans advanced by marketingSocieties, Loans of Credit Societies recovered byMarketing of produce, Cost of management,Profit/Loss, Govt. Aid received.

177

Banking Statistics

Annex 2.13 (Contd.)


Number of units, Working Capital, Paid-upcapital, Reserves, Deposits, Borrowings, ClosingStock, Loans advanced, Processing activities, viz.,installed capacity, quantity processed, capacityutilization, etc., supply of agricultural requisites,Loans of credit societies recovered, Profit andLoss, Cost of management, Government Aidreceived, Godowns owned, capacity etc.

Details of Number of Societies, Membership,Working Capital, Paid-up capital, Reserves,Borrowings, Fixed Assets, Loans advanced,outstanding and Overdue, Purchases, SalesAccumulated Profit/Loss, Government subsidies,etc. (Other livestock product societies includepiggery societies, kennels, mutton farms, etc.Sheep-breeding societies, which rear sheep forthe purpose of wool and incidentally mutton, arealso included. Cattle-breeding societies whichrear cattle - both milch and draught animals -—for the purpose of improving the breed anddraught animals for agricultural operations suchas ploughing, interculture and transport or forthe purpose of meat or beef are reported underother livestock.)

All Processing Societies -Number, Membership, Liabilities& Assets

National & State

Central

Primary

Processing Societies - SugarFactories

Processing Societies - CottonGinning and Pressing

Processing Societies - OilCrushing

Processing Societies - PaddyProcessing

Processing Societies - Rice Mills

Processing Societies - Fruits andVegetables

Processing Societies - OtherCommodities

All Milk Supply/Other Livestock/Livestock Product Unions &Societies - Number, Membership,Liabilities & Assets

Milk Supply Unions & Societies -Number, Membership, Liabilities& Assets

Ghee Unions & Societies –Number, Membership, Liabilities& Assets

Other Livestock Product Unions& Societies - Number,Membership, Liabilities & Assets

Poultry Unions & Societies -Number, Membership, Liabilities& Assets

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26 & 27

178


Annex 2.13 (Contd.)


Number of Societies, Coverage in Hectares, i.e.the area owned or acquired by the society fromits members, including the leasehold lands, ifany, Financial Details and Fixed Assets (includingthe value of all the constructions on land, suchas buildings, godowns, pump-houses, cattle-sheds, machine-sheds, etc. The expenditureincurred on reclamation of land for cultivationpurposes and the expenditure on landdevelopment, the value of machinery, liketractors, bull-dozers, pump-sets and otheragricultural implements as well as vehicles ownedby the society are also indicated), Loans &Advances, Outstanding & Overdue, EstimatedBad and Doubtful Debts and Assets, Value ofSales of commodities produced and processed,if any, Cost of Management, Profit and Loss

Machinery (i.e., the book value of mechanicalboats and other machinery including cold storageplant, mechanised fishing boats, machine spareparts, and transport vehicles owned by thesociety), Stocks, Payments for Acquiring FishingRights, Catch, Sales, Cost of Management andGovernment Aid.

Weavers’ Societies are subdivided into threegroups, viz. handloom, powerloom and khadisocieties. Under each sub-group, separate dataare furnished in regard to societies that specializein producing cotton, woollen, and silk goods.Some of the societies are of mixed type, e.g.,handloom and khadi, handloom and powerloom,etc. In such cases, the society is classifiedaccording to the value of the main item/s ofproduction. If, for example, the value of the majorportion of production of a society (51 per centor more) is by powerlooms, it is classified under‘powerlooms’ although it may undertakeproduction of handloom cloth also.

‘Other industrial societies’ have been classifiedinto 16 broad groups for the purpose of statistical

Farming Societies - Joint Farming& Collective Farming - Others -Number, Membership, Coverage,Liabilities & Assets

Fisheries Societies - Number,Membership, Coverage, Liabilities& Assets

Weavers Societies — Number,Membership, Coverage, Liabilities& Assets

National & State

Central

Primary

Primary - Handloom

Primary - Khadi

Primary - Powerloom

Other Industrial Societies -Number, Membership, Liabilities& Assets

National & State

28 & 29

30

31

32

33

34

35

36

37

179

Banking Statistics

Annex 2.13 (Contd.)


data and the data are furnished separately inrespect of various types of Societies at differentlevels.Details regarding the number of SocietiesStocks, Fixed Assets, Loans, etc., Societiesundertaking Production and Sale, Societiesproviding Supply, Sale and Other Services,Societies undertaking both Production and Saleand Provision of Supply, Sale and Other Services,Working Capital, Reserves, Other Funds andDeposits, Accumulated Loss/Profit, GovernmentAid, Cost of Management, Profit and Loss arefurnished.

Most of the Spinning Mills are of mixed type,i.e., admit both the growers of cotton andconsumers of yarn as members. Data arefurnished separately for the three types ofsocieties, viz.

(a) growers of cotton,

(b) consumers of yarn, and

(c) mixed type

Data regarding Numbers of Mills, Number ofSpindles (licensed and working), Value of GoodsProduced, Value of Finished Goods Sold, WagesPaid and Other Manufacturing Expenses, Costof Management, Profit and Loss etc., arefurnished.

Number of Consumers’ Societies (including thenumber of consumer stores and departmentalstore run as independent society), Number ofBranches, Closing Stock, Outstandings underCredit Sales, Purchases, Sales, Membership,Paid-up Capital, Borrowings , Other Assets, FixedAssets and Accumulated Loss and Profit , Costof Management, Profit and Loss, Number ofGodowns.

Central

Primary

Spinning Mills - Number,Membership, Liabilities & Assets

Consumers’ Co-operativeSocieties – Number,Membership, Liabilities &Assets

National & State LevelFederations

Wholesale/Central Stores

Primary Stores

Pure Primary Stores

38

39

40

41

42

43

44

180


Annex 2.13 (Contd.)


The number of Societies undertaking distributionof Consumer Goods, number of retail branches/shops, etc., are furnished.

Number of Societies, Membership, Paid upCapital, Borrowings, Fixed Assets, Loans,Working Capital, Reserves, Accumulated Loss/Profit, Independent Houses and TenementsConstructed during the year (only in respect ofsuch houses or tenements where theconstruction work has been completed), Profitand Loss, etc., are furnished.

No. of Industrial estates, membership, WorkingCapital, Paid-up capital, Deposits, Borrowings,Investments, Fixed Assets, Loans advanced, No.of worksheds completed, occupied, Incomeearned, Govt. subsidies received, Cost ofManagement, Cost of Construction Profit andLoss, etc.

Number of Societies, Societies Operating inUrban and Rural Areas, Membership, Paid-upCapital, Reserves, Borrowings, Loans, Assets,Accumulated profit/loss, Work Executed (i.e thevalue of contracts actually executed during theyear), Income Earned, Cost of Management, Profitand Loss, Value of consumer goods distributed,Govt. subsidies received etc.

Number of Societies, Area of Operation of ActiveSocieties, Membership, Working Capital, Paid-upCapital, Deposits, Borrowings, Loans, Value of

Distribution of Consumers goodsby Co-operative Societies in RuralAreas

Total

By PACS, LAMPS, FSS

By Marketing Societies

By Processing Societies

By Consumer Societies

By Other Societies

Housing Societies – (State) -Number, Membership, Liabilities& Assets

Housing Societies – (Primary) -Number, Membership, Liabilities& Assets

Co-operative Industrial Estate –Number, Membership, Liabilities& Assets

Total

National & State

Central

Primary

Labour Contract & ConstructionSocieties - State & District(Unions) - Number, Membership,Liabilities & Assets

Labour Contract & ConstructionSocieties – (Primary) - Number,Membership, Liabilities & Assets

Forest Labourers’ Societies –(State) - Number, Membership,Liabilities & Assets

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

181

Banking Statistics

Annex 2.13 (Contd.)


forest contracts allotted to the societies duringthe year by different authorities, viz.,Government, local bodies and others, Value offorest produce collected, Value of Sales, Wagespaid, Cost of Management, Govt. subsidies,Profit/Loss, Value of Consumer Goodsdistributed.

These tables relate to all the non-credit societies- agricultural and non-agricultural - coveringactivities that are not reported in any, of theearlier tables. ‘Other Societies’ include, amongothers, the following:

1. Agricultural Societies -a) Tenant farmingb) Better farmingc) Crop protectiond) Land revenue redemptione) Rural reconstructionf) Veterinary and first aid, etc.g) Irrigation societiesh) Cooperative Cold Storage Societies

2. Non-Agricultural Societies -a) Cinemab) Tradersc) Medical and Public Healthd) Educatione) Social service, etc.f) Transport societies

Number of Societies, Membership, WorkingCapital, Paid-up Capital, Deposits, Borrowings,Loans, Business Activities, Cost of Management,Govt. subsidies, Profit/Loss, and Other FinancialDetails in respect of state level non-creditsocieties if any, not included in any of the othertables, are separately reported in this table.

Co-operative societies with objects not confinedto one state and to which the provisions of theMulti-Unit Co-operative Societies Act, 1942, areapplicable are reported in this table. Number ofSocieties, Membership, Working Capital, Paid-upCapital, Deposits, Borrowings, Loans, Details ofPrincipal Business Undertaken, Distribution ofconsumer goods, Cost of Management, Govt.subsidies, Profit/Loss etc. are indicated.

Forest Labourers’ Societies –(Primary) - Number, Membership,Liabilities & Assets

Non-Credit Societies - Others -Agricultural and Non-Agricultural- Number, Membership, Liabilities& Assets

Non-Credit Societies - Others -Agricultural - Number, Member-ship, Liabilities & Assets

Non-Credit Societies - Others -Non-Agricultural - Number,Membership, Liabilities & Assets

Multi-Unit Co-operative Societies- Number, Membership, Liabilities& Assets

60

61

62

63

64

182


Annex 2.13 (Contd.)


Details of number of centers, no.of tractorsowned, no.of farmers benefited, Income fromhiring servicing, distribution of agri inputs,supply of agri machinery, profit/Loss have beengiven.

This table relates to the central and the primarysocieties audited during the year, irrespective ofthe period covered by the audit. The no. ofsocieties due for audit and no. of societiesaudited, audit classification, etc., have beenindicated.

This table relates to societies under liquidationsince the previous year/s as also those newlytaken into liquidation during the year underreport. The no. of societies under liquidation,societies wound up, Total assets and liabilitiesof the societies under liquidation, etc., arereported.

Data on No. of Unions/Institutions, Membership,No. of Staff engaged in educational Activities,Programmes conducted, No. of beneficiaries,Training of officials/employees, Income &Expenditure, are presented.

This table gives particulars relating to thedepartmental staff, both at the headquarters andin the field. As there are different categories ofheadquarters and field staff in different states,only certain broad categories have been providedfor. In the case of head-quarters’ staff, they are(i) gazetted officers, (ii) other supervisory staffincluding non-gazetted officers, (iii) ministerialstaff, e.g., clerks, typists, etc., and (iv) otherssuch as peons, attendants, etc. In regard to thefield staff, the columns provided for relate tosenior inspectors, junior inspectors, seniorauditors, junior auditors and others.

The data in this table include the number ofpersons employed both by credit and non-creditsocieties. The data are furnished by types ofsocieties in respect of various categories of staff,viz., Managerial Staff, Other administrative Staff,Technical staff and menial staff employed.

Co-operative Agro Service Centres- Position

Audit & Audit Classification ofNon-Credit Co-operative Societies

Societies Under Liquidation

Co-operative Unions &Supervisory Institutions

Administrative Staff - Co-operative Department

Employment in Non-Credit Co-operative Societies - Total

Employment in Non-Credit Co-operative Societies

65

66

67

68

69

70

71

183

Banking Statistics

Annex 2.13 (Concld.)


Information relating to arbitration cases pending,filed during the year, settled, etc., for botharbitration cases and execution cases arefurnished separately.

The agency wise details of number and amountof embezzlement cases are furnished.

Details regarding number of Committees ofManagement Societies at all levels suspended andrestored during the year are furnished.

Details regarding number of Committees ofManagement Societies at all levels supersede andrestored during the year are furnished.

The details of the income earned, viz., Intereston loans and advances, investments, commissionand brokerage, subsidies & donations, etc., andexpenditure incurred, viz., Interest on deposits,salaries, rent, taxes, insurance, law charges,administrative expenses, provisions, etc., duringthe year by the societies are furnished here.

72

73

74

75

76

77

Arbitration and Execution Casesfor Recovery of Loans andAdvances

Embezzlement Cases

Suspension of Committees ofManagement

Supersession of Committees ofManagement of Societies -Number -

Data Relating to Income &Expenditure of Non-Credit Co-op.Societies – Income

Data Relating to Income &Expenditure of Non-Credit Co-op.Societies – Expenditure

184


Annex 2.14

CONTENTS OF THE PUBLICATION OF STATISTICS ON RRBS

Sr. No. Statement Name Content

1 Progress of RRBs No. of RRBs/Dists/Branches, Deposits, OutstandingAdvances, CD Ratio, Aver Per RRB [Deposit, O/sAdvances], Aver per Branch [Deposit, O/s Advances]

2 State-wise No. of RRBs, No. of RRBs/Dists/Branches, Deposits, Loans &Branches, Deposits, Advances (Outstanding) [Agri. Advances, Non-Agri.Outstanding Advances, Advances, Total Advances] CD Ratio, BorrowingsBorrowings, etc. [NABARD, Sponsor Bank & Others]

3 Sponsor Bank-wise distribution No. of RRBs/Dists/Branches, Deposits, Advances O/sof Deposits, Advances, in Sponsored RRBs, Total Borrowings, BorrowingsBorrowings, Staff deputed, etc. from Sponsor Bank, Sponsor Banks Refinance to O/s

Adv. of its Sponsor RRBs, Officers deputed bySp.Bank

4 Region/State/Bank-wise No. Dist./Branches, Deposits/Outstanding Credit/distribution of Offices, Deposits, Loans Issued [No. of A/cs, Amount], CD RatioOutstanding Advances andLoans issued

5 Sponsor Bank-wise distribution CD Ratio, Loans Issued [A/cs, Amount], Borrowingsof Deposits, Outstanding [Total Sp. Bank], Investments, Staff Position [Own/Advances, Loans issued, Sp. Bank]Borrowings, etc.

6 Region/State/District-wise No. of Branches, Deposits/ O/S Advances/ LoansBranches, Deposits, Issued [No. of A/cs, Amount], O/S Advances/LoansOutstanding Advances and Issued [to SC/ST – to Minorities] [No. of A/cs,Loans issued Amount]

7 Region/State/Bank-wise Current/Savings/Term/Total [No. of A/cs, Amount]Classification of Deposits

8 Region/State/Bank-wise Sponsor Bank, NABARD [ST/MT/LT – Total], SIDBI,Borrowings from Sponsor Others, TotalBanks, NABARD, SIDBI & Others

9 Region/State/Bank-wise Sponsor Bank, Priority Sector Advances [ST(Cropclassification of Outstanding Loans)] [Term Loans(Agri. & Alld.)] [Rural Artisans]Advances [Small Scale Inds], [Retail Trade, etc.] [SHGs][others],

Non-Priority Sector Adv., total Advances[No. of A/cs, Amount]

10 Region/State/Bank-wise Sponsor Bank, Priority Sector Advances [ST(Cropclassification of Loans Issued Loans)] [Term Loans(Agri. & Alld.)] [Rural Artisans]

[Small Scale Inds], [Retail Trade, etc.] [SHGs][others],Non-Priority Sector Adv., total Advances[No. of A/cs, Amount]

185

Banking Statistics

11 Region/State/Bank-wise Asset Standard Assets, Sub Standard Assets, DoubtfulClassification NPA Position Assets [Unsecured] [Secured] [Upto 1 year, 1 – 3 year,

Above 3 years], Loss Assets, total NPA

12 Region/State/Bank-wise Asset Standard Assets, Sub Standard Assets, DoubtfulClassification and NPA Position Assets [Unsecured] [Secured] [Upto 1 year, 1 – 3 year,

Above 3 years], Loss Assets, total NPA

13 Region/State/Bank-wise Cash, Balances with RBI, Current Account Balance,Balances with Banks with Sp.Bank, Investments [Term Deposits with

Banks, Money at Call, Other Investments, Total]

14 Region/State/Bank-wise Regional Rural Bank Staff [Officers, Clerks, Others,Staff Position Total of which Belonging to SC/ST, Total Trained

Staff, Staff Trained during the year], Sponsor BankStaff

15 Region/State/Bank-wise Demand, Collection, Balance, % of RecoveryDemand, Collection & [No. of A/cs, Amount]Balance (DCB) Position as on30 June 2002


Sr. No. Statement Name Content

186


Annex 2.15

URBAN COOPERATIVE BANKS: DESCRIPTION OF RETURNS, PERIODICITY ANDDUE DATE OF SUBMISSION

Sr. SubmittedNo. Return Name Description Periodicity by Due Date

1. Average Daily Section 42(1) of RBI Fortnightly RBI-DAD Usually DADBalance Act 1934-maintenance forwards to ROs

of Cash Reserve Ratio the next fortnight(CRR) by ScheduledPrimary (Urban)Cooperative Banks

2. Balance Sheet BR Act (AACS) Yearly as on All UCBs On or beforeSec.29 & 31 31 March 30 September

3. Form B RBI Act Sec 42 Fortnightly Scheduled Within 7 days frombanks the reporting Friday/

last Friday of themonth

4. Form IX BR Act (AACS) Monthly All UCBs Last day of theSec.27 subsequent month

5. Form IX (special) BR Act (AACS) Yearly as on All UCBs 15th MaySec.27 31 March

6. Form VIII BR Act (AACS) Yearly as on All UCBs Within 30 days fromSec 18 & 24 31 Devember the close of the

calendar year

7. Form I with BR Act (AACS) Monthly All UCBs 20th of theappendices I & II Sec 18 & 24 subsequent month

8. Form II BR Act (AACS) Monthly All UCBs Last day of nextSec 20 (2) month

9. Monetary Aggregated Non Statutory Monthly Deposits 10th of next monthRs.10 croreand above

10. Penal interest **BR Act (AACS) Whenever All UCBs - As soon as theSec 18 & 24 there is default defaulting Form I is received

in maintenanceof CRR & SLR

11. Penalty register **BR Act (AACS) Whenever All UCBs - Show cause is issuedSec 46(A) 47A there is default defaulting after due date of that

in submission particular returnof the returns

Licensing

1. Allotment Register RBI Whenever required

2. Bank licensing **BR Act (AACS) RBI Whenever requiredregister Sec 22

187

Banking Statistics

Annex 2.15 (Contd.)


3. Branch Licensing **BR Act (AACS) RBI Whenever requiredRegister Sec 23

4. Form VI Statement BR Act (AACS) Sec 23 Quarterly All UCBs Within one monthof Offices in India from the close of

the quarter

Planning

1. Loans and Advances Non -Statutory Yearly All UCBs Within one monthto Priority Sector/ from the end ofweaker Section period to which it

relates

2. Priority Sector Non -Statutory March & All UCBs Within one monthAdvances Credit September from the end of periodFlow to Minority to which it relates

3. UCB’s Investment in BR Act (AACS) Sec 19 Quarterly All UCBs within one monthother UCBs/ from the end of periodInstitutions to which it relates

ALM (Asset LiabilityManagement)

1. Interest Rate Non-Statutory Last reporting ScheduledSensitivity Friday of the banks

month

2. Short term Dynamic Non-Statutory Monthly ScheduledLiquidity banks

3. Statement of Non-Statutory Monthly ScheduledStructural Liquidity banks

MIS (ManagementInformation System)

1. Statement of suit Non-Statutory Quarterly Scheduled Within one monthfiled account of banks from the close of theRs.1 crore & above quarter

2. Statement for Non-Statutory Quarterly Scheduled Within one monthwillful defaults of banks from the close of theRs. 25 lakhs & above quarter

Rehabilitation

1. Annual financial Annually All UCBsReview

2. Banks under Non-Statutory RBIDirection

3. Banks under Non-Statutory RBILiquidation

188


4. Banks under Non-Statutory RBISupersession

5. Quarterly Progress Quarterly All UCBsReport

Directive

1. Advances against Non-Statutory Quarterly All UCBs Within 15 days fromsecurity of Shares/ the close of theDebentures quarter

2. Annual NPA Non-Statutory Yearly All UCBs Within 2 months fromthe end of thefinancial year

3. Daily Call & NoticeNon-Statutory Fortnightly All UCBs Within 10 days fromMoney the close of the

fortnight

4. Loans & Advances to Non-Statutory Quarterly All UCBs Within 15 days fromthe Bank’s Directors the close of the quarter

Fraud

1. Actual reports Non-Statutory No fixed ALL UCBs As soon as cases comeperiodicity to the notice of a bank

2. Category Non-Statutory QuarterlyClassification

3. Complaint Register Non-Statutory RBI No fixed periodicitybut as soon as thebank reports

4. Frauds Outstanding Non-Statutory Quarterly All UCBs 15 days from the closeof the quarter

5. Report on dacoities/ Non-Statutory Quarterly* All UCBs Within one week ofRobberies/Theft/ occurrenceBurglaries

Off-siteSurveillance(OSS)

1. I-Statement on Non-Statutory Quarterly Scheduled 6 weeks from the closeAssets & Liabilities banks - of the Quarter

Depositsmore thanRs.100 crore

2. II-Statement of Non-Statutory Quarterly Scheduled 6 weeks from the closeEarnings banks - of the Quarter


Annex 2.15 (Contd.)


189

Banking Statistics

3. III-Statement on Non-Statutory Quarterly Scheduled 6 weeks from the closeAsset Quality banks - of the Quarter


4. IV- Statement on Non-Statutory Quarterly Scheduled 6 weeks from the closeNon Performing banks - of the QuarterAssets Deposits

more thanRs.100 crore

5. V – Statement on Non-Statutory Quarterly Scheduled 6 weeks from the closeSegment/Sector banks - of the Quarter


6. VI-Statement on Non-Statutory Quarterly Scheduled 6 weeks from the closeConnected Lending banks - of the Quarter


7. VII-Statement on Non-Statutory Quarterly Scheduled 6 weeks from the closeCRAR banks - of the Quarter


8. VIII-Statement on Non-Statutory Yearly, as on Scheduled 6 weeks from the closeBank Profile 31 March banks - of the Quarter


* difference in Manual & Application.

** RBI executes under the given provision.



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3.1. Introduction

In the system of national accounts, flow of fundsaccounts is one of the four complementarysystems of national economic accounting; theother three being: national income accounts,national balance sheet and input – outputanalysis. The compilation of flow of fundsaccounts for the Indian economy was initiatedin 1959 under the joint auspices of CentralStatistical Organisation (CSO) and the ReserveBank of India. Later in 1959, a model set ofaccounts, which could be followed was suggestedby Working Group constituted for the purpose.This Group took note of statistics then availableand the important work done by Prof. H.W. Arndtof the National University of Australia in 1959.Subsequently, the work was developed by RBIand published the financial flow accountsregularly. The flow of funds accounts explainsthe routes of financing the investment and alsothe interaction between economic activity andfinancial activity, portraying simultaneously thefunds transacted between different economicunits. The flow of funds accounts thus representa set of accounts designed to show transactionsbetween different economic units effected throughmedium of money and credit. These transactionsexclude barter, book-keeping transfers of internalnature pertaining to a particular unit, intra-unittransactions and inputted transactions.

The flow of funds accounts can be divided intofinancial flows and non-financial flows. The latercategory covers the transactions relating tocurrent receipts, current payments, whichinvolve the exchange of goods and services formoney or near money holdings or unilateraltransfers, and the real assets formation, viz.,fixed assets formation and increase ininventories. The current receipts and currentpayments appear in the current account whereasthe real assets formation and its financingappear under capital account. The transactionsrelating to borrowing and lending operationsresulting in borrowing or repayment of debt andincrease/decrease in financial assets are termedas financial flows.

3. FLOW OF FUNDS ACCOUNTS COMPILATION

By the very nature, the term ‘flow of funds’indicates transactions of any economic unitduring a period of time. The sources of fundsconstitute the increase in liabilities (borrowing)and decrease in assets (reduction of moneybalances and assets). The uses of funds comprisedecreae in liabilities (repayment of debt) andincrease in assets (acquisition of assets). Whenthe accounts are presented on these lines, theyare said to be on ‘gross basis’. But in practice,however, such data are not available for allsectors to present the accounts on gross basisand, therefore, they are presented on net basis.In other words, net increase in liabilities andnet increase in assets are only presented.

The next few sections present various sourcesof data and to a large extent, the compilationprocedure of the financial flow of funds accounts(also referred as financial flows accounts). Thus,the term ‘flow of funds’ referred to in the sectionhenceforth, would generally relate to financialflows accounts.

3.2. Sectoral Classification of IndianEconomy

For the purpose of Flow of Funds (FOF)accounts, the Indian economy is divided into sixsectors, the criteria for the classification beingthe institutional structure and activity status.

The six sectors are (i) Banking, (ii) OtherFinancial Institutions, (iii) Private CorporateBusiness, (iv) Government, (v) Rest of the Worldand (vi) Households. This is in line with therecommendations of the Working Group on Flowof Funds, 1963. Broad coverage of each sectoris set out below:

(i) Banking Sector: It covers institutionswhose liability consists of currency anddeposits. Specifically, the Reserve Bank ofIndia, which is the currency issuingauthority, and deposit taking bankscomprising commercial banks, co-operativebanks and credit societies are included.The commercial banks comprise the StateBank of India and its subsidiaries, other

191

Flow of Funds Accounts Compilation

nationalised banks, Regional Rural Banks(RRBs), other Indian scheduled and non-scheduled commercial banks, and foreignbanks operating in India. ‘The co-operativebanks and credit societies’ cover State Co-operative Banks, Central Co-operativeBanks, Primary Cooperative Banks,Agricultural and Non-agricultural CreditSocieties, Central and Primary LandDevelopment Banks, and Industrial (Stateand Central) Cooperative Banks.

(ii) Other Financial Institutions: Institutionscovered under this sector are listed inAnnex 3.1. The sector covers i) financialcorporations and companies ii) insuranceand iii) provident and pension funds.Financial corporations, coveringdevelopment financial institutions at allIndia and state levels, Unit Trust of India(UTI), mutual funds and non-bankingfinancial and investment companies. Theinsurance sub-sector comprises life andgeneral insurance corporations andcompanies. The non-government providentfund includes the Employees Providentfund Scheme, Seamen’s P.F. Scheme,Employees P.F. of RBI, Commercial banks,etc.(See Annex 3.1 for details).

(iii) Private Corporate Business Sector: Thecooperative non-credit societies and the non-government non-financial companies are thetwo sub-sectors in this sector. The co-operative non-credit societies comprisemarketing societies, co-operative sugarfactories, cotton ginning and pressingsocieties, milk supply unions and societies,fisheries societies, farming societies,irrigation societies, consumers’ co-operativestores, housing societies, weavers’ societies,spinning mills, etc. as detailed out inAnnex 3.1. Non-government non-financialcompanies comprise public and privatelimited companies (including foreigncontrolled rupee companies), which areregistered in India under the Indian JointStock Companies Act, 1956, and branchesof foreign companies operating in India.Operating companies are defined ascompanies, which have commenced regular

commercial production and started earningincome from their main activity. However,the following companies are excluded: (i)companies under construction, (ii)promotional and developmentalorganisations/associations not functioningfor profit, (iii) companies which do not reportany business/activity, (iv) companies whichare on the verge of liquidation, (v) companieswhich have sold out their assets, (vi)companies which are under the process ofwinding up and (vii) companies which havealready applied for voluntary liquidation, ason a particular date.

(iv) Government: The constituents of thissector are: (a) central government and itsdepartmental commercial undertakings, (b)state governments and union territoriesincluding their departmental commercialundertakings, (c) local authorities (coveringcity corporations, municipalities,panchayats and port trusts) and (d)government non-departmental non-financial commercial undertakingsincluding state electricity boards. The postoffice savings banks are also included.

(v) Rest of the World: The sector coverstransactions of resident units with all non-resident units covering Indian nationalsabroad, foreign nationals and internationalinstitutions. A list of internationalinstitutions covered in the sector isfurnished in Annex 3.3.

(vi) Households: This is the residual sectorcomprising the individuals, households,non-government non-corporate enterprisesof farm/firm business and non-farm/firmbusiness, (like sole proprietorships andpartnerships), trusts and non-profitinstitutions.

3.3 Instruments

The available financial instruments are groupedinto the following eleven categories in FOFaccounts:

(i) Currency: It includes notes in circulationissued by the Reserve Bank and one-rupee

192


notes and coins issued by the Governmentof India.

(ii) Deposits: Under this head, deposits heldwith RBI, commercial banks, co-operativebanks, cooperative credit and non-creditsocieties as also deposits received byfinancial corporations, government andRest of the World are included. Depositswith non-banking companies are alsoincluded here. Compulsory deposits withRBI, which are shown separately, areexcluded.

(iii) Investments: This category covers thefollowing instruments:

Government Securities: This includesmarket loans, treasury bills, special bonds(including bearer bonds) and compensationbonds issued by the central and stategovernments and central government’sborrowing from RBI against compulsorydeposits.

Other Securities of Government (other thansmall savings): This includes bonds, sharesand debentures issued by the port trusts,municipal corporations, housing boards,state electricity boards and non-departmental non-financial undertakings.

Securities of Banks: This refers to the paid-up capital of RBI and commercial banks;shares and debentures issued by co-operative banks and credit societies.

Securities of Other Financial Institutions:Shares, units, bonds and debenturesissued by financial corporations, non-banking financial companies andinsurance companies are covered here.

Private Corporate Securities: Shares anddebentures issued by non-government non-financial companies and co-operative non-credit societies are included under this head.

Foreign Securities: Securities issued byforeign institutions, foreign exchangeassets appearing against investmentsunder sources of funds of the Rest of theWorld sector are covered here.

Other Securities: When the details ofsecurities are not identified against anysector, they are shown under this category.

(iv) Loans and Advances: Items includedunder this head are borrowings of allsectors.

(v) Small Savings: National SavingsCertificates, Post Office Deposits, etc.,issued by Central Government are includedunder this instrument.

(vi) Provident Fund: Non-governmentprovident funds and government providentfunds are covered here. Pension funds arealso included here.

(vii) Life Fund: Items covered under this headare life insurance fund of Life InsuranceCorporation of India (LIC), postal insurancefund of central government and stategovernments’ insurance fund.

(viii) Compulsory Deposits: This refers todeposits held with RBI in pursuance of thelegislative requirement, viz., CompulsoryDeposits Scheme, 1974. The Scheme hassince been withdrawn.

(ix) Trade Credit/Debt: Under this head, tradecredit/debt by non-government non-financial companies, government non-departmental undertakings and port trustsis reported.

(x) Foreign Claims Not Elsewhere Classified:Certain foreign claims, which could not beclassified under any of the instrumentslisted above are shown here. Such itemsare (i) commercial banks’ branchadjustments - outside India, (ii) excess ofassets over liabilities as per Form X ‘ ‘and (iii) such other items which mayappear under sources/uses of funds.

(xi) Other Items Not Elsewhere Classified:The items, which could not be classifiedunder any of the above listed instruments,are shown here. The items may be differentfor sources and uses of funds. Generally,bills payable/receivable, branchadjustments in India, other financial

193


liabilities, other financial assets arereported here. For the central government,net purchase of domestic gold and silver(uses of funds) is also shown against thiscategory.

3.4. Sources of Data

In view of the comprehensive coverage anddisaggregated presentation, voluminous data arerequired from different sources to prepare FOFaccounts. In India, the required data are culled

out from published balance sheets, statementson sources and uses of funds of the concernedinstitutions, data available in surveys and fromspecial returns designed exclusively forconstructing FOF accounts. However, noindependent accounts for the household sectorare available. Accounts for the household sectorare prepared as residual based on the accountsof the other five organized sectors describedearlier. Table 3.1 presents the sector-wise detailsof sources of data.

Table 3.1 : Sources of Data for Compilation of FOF Accounts

Sector Sources

1. Banking

1.1 Reserve Bank of India 1. Statement of affairs of the Reserve Bank of India ason March 31 (RBI Bulletin).

2. Data on ‘notes in circulation’ and ‘circulation of rupeecoin and small coin’, as on March 31 (RBI Bulletin).

3. Special returns from regional offices of the RBI andDepartment of Government and Bank Accounts, RBI,relating to:

(i) Bills payable;

(ii) Other deposits;

(iii) Other assets;

(iv) Other liabilities; and

(v) Break-up of investments by the BankingDepartment of the RBI.

1.2 Commercial Banks 1. Data on certain items of assets and liabilities ofscheduled commercial banks as on last reportingFriday (RBI Bulletin).

2. Survey of ownership of deposits with scheduledcommercial banks in India as on the last Friday ofMarch (RBI Bulletin).

3. Survey of investments of scheduled commercial banksas at the end of March (RBI Bulletin).

4. Survey on outstanding credit of scheduled commercialbanks (according to organisation and occupation)(Basic Statistical Returns, RBI).

5. Deployment of gross bank credit by major sectors ason the last reporting Friday (RBI Annual Report).

194


6. Form X on various items of assets and liabilities ofscheduled and non-scheduled commercial banks, ason March 31.

1.3 Co-operative Banks and 1. Assets and liabilities of the co-operative banks andCredit Societies credit societies, published in Statistical Statements

relating to Co- operative Movement in India Part I -Credit Societies, NABARD.

2. Special information on assets and liabilities of stateand district central co-operative banks.

2. Other Financial Institutions

2.1 Development Financial 1. Balance sheets of the development financialInstitutions institutions (as given in their respective Annual

Reports).

2. Special information relating to assets and liabilitiesof State Industrial Development Corporations.

2.2 Unit Trust of India 1. Balance sheet of Unit Trust of India (Annual Report,UTI).

2. Special information giving scheme-wise details of UTI’sbalance sheet.

2.3 Insurance Balance sheets of LIC, GIC, DICGC, ECGC and foursubsidiaries of GIC and annual reports of privateinsurance companies from 1990’s onwards. IndianInsurance Year Book for years prior to nationalization ofInsurance companies.

2.4 Mutual Funds 1. Balance sheets of various Mutual Funds.

2. Special information on various items of assets andliabilities from mutual funds.

2.5 Non-Government Provident Balance sheets of employees’ provident fund (EPF)Fund organization, coal mines provident fund organization,

seamen’s provident fund organization, and Assam teaplantations provident fund organization, provident fundsof RBI, commercial banks, LIC, dock labour boards, allport trusts, state financial corporations, IndustrialFinance Corporation of India and Air India/IndianAirlines, etc.

2.6 Financial and Investment 1. Studies on finances of financial and investmentCompanies companies (RBI Bulletin).

2. Articles on growth of deposits with non-bankingcompanies (RBI Bulletin).

Sector Sources

195


3. Private Corporate Business

3.1 Non-Government 1. Published articles relating to assets and liabilities ofNon-Financial Companies medium and large public limited companies, medium

and large private limited companies (RBI Bulletin).

2. Data on global paid-up capital from Department ofCompany Affairs, Government of India.

3.2 Co-operative Non-Credit Assets and liabilities of co-operative non-credit societies;Societies published in Statistical Statements relating to Co- operative

Movement in India, Part II - Non-credit Societies, NABARD.

4. Government

4.1 Central Government 1. Economic and Functional Classification of centralgovernment budget.

2. Finance Accounts of the union government.

3. Budget documents of the central government.

4. Ownership pattern of central government securities(Report on Currency and Finance, RBI).

5. Special information on ownership of Government ofIndia Treasury Bills as on March 31.

4.2 State Governments and 1. Consolidated finances of state governments andUnion Territories union territories (RBI Bulletin).

2. Finance accounts of each state government/combinedfinance and revenue account of the union and stategovernments in India.

3. Ownership pattern of state governments securities(Report on Currency and Finance, RBI).

4.3 Local Authorities Assets and liabilities of port trusts (Annual Reports ofvarious port trusts).

4.4 Government 1. Assets and liabilities of public sector enterprisesNon-Departmental (Public Enterprises Survey, Bureau of PublicNon-Financial Enterprises Enterprises, Government of India).

2. Assets and liabilities of state electricity boards andDamodar Valley Corporation (as published inrespective Annual Reports).

3. Articles on growth of deposits with non-bankingcompanies (RBI Bulletin).

Sector Sources

196


3.5 Methodology of Compilation

The FOF Accounts are compiled based on asystematic procedure following several steps. Atthe outset, transactions of financial nature shouldbe segregated from transactions in non-financialnature. However, transactions of non-financialnature have been broadly described in Section4.1 ‘Introduction’. Based on these, transactionsof financial and non-financial nature have beensegregated. For example, change in fixed assetsof an institution is reflected in its non-financialflows while cash holdings under the system aregrouped under financial flows. All transactionsof financial nature should, therefore, be identifiedand included in financial flow funds. In thesecond stage, the transaction of financial natureare assigned to different sectors depending uponthe sector from whom or to whom the funds tobe borrowed or lent. Further, intra-sectoraltransactions are netted out, while inter-sectoraltransactions will be entered in two places - thesector from which the funds have come and therecipient sector. In the third stage, the transactionof financial nature are categorised as eithersources or uses depending upon the receipt andpayment criteria described earlier. The followingsection describes the procedure of compilingsources/uses of funds according to instrument-wise and sector-wise classification.

3.5.1 Banking Sector

The accounts of the three sub-sectors under thissector are prepared independently on the basis of

their balance sheets. The balance sheet datapertain to March 31 for RBI, June 30 for co-operative banks and credit societies, and lastreporting Friday of March for commercial banks.The choice of last reporting Friday as against March31 for commercial banks is preferred to avoid theyear-end bulge in a number of items of assets andliabilities. The procedure of the compilation of theaccounts as well as estimation of sectoralparticulars in respect of different instruments ispresented below for each sub-sector.

a) Reserve Bank of India

Notes in Circulation

‘Notes in circulation’ comprise bank notes (i) heldin Banking Department of RBI, and (ii) incirculation (i.e., outside the RBI). Bank notes andrupee coins in circulation are held by differentinstitutions/sub-sectors as part of their savingand also for day to day transactions. As the cashheld by different institutions/sub-sectorsincludes both the bank notes and thegovernment notes, break-up for each sub-sectoris made by assuming that their ratio to oneanother is the same as indicated in the data ontotal ‘notes in circulation’ and total ‘circulationof rupee coins and small coins’ as on March 31of the respective year. The sectoral distributionof bank notes has been worked out based onthe cash held by different organized sectorsreported in their accounts and households partis obtained as residual.

Sector Sources

5. Rest of the World Special information on payments and receipts under (i)Private capital, (ii) Official miscellaneous capital, and (iii)Banking capital, from balance of payments accountspublished by RBI.

6. Household The accounts of this sector have been basically drawnfrom the accounts of all five sectors described above.Assets or uses of funds reflected in these sectors againsthousehold sector represent liabilities or sources of fundsof household sector. Similarly liabilities or sources offunds from household represent assets or uses of fundsof household sector. Thus there is no separate publishedsource giving data on household sector.

197


Paid-up Capital

The paid-up capital of RBI has remainedconstant at Rs.5 crore since 1948. As there isno change in the amount so far, the flow onthis account is nil.

Deposits

The deposits with RBI are classified as deposits ofcommercial banks, co-operative banks, insurancecompanies/corporations, financial corporations,and provident funds, government, Rest of theWorld, Compulsory Deposits, and others (items likecheques for collection account, uncleared items ofthe credit account, sundry deposits, etc., whichcould not be allocated to any sector). In order tosegregate ‘other’ deposits into these institutional/sub-sectoral details, special information as onMarch 31 is called for from the regional offices ofthe RBI. ‘Other deposits’ of the RBI, after excludingthe Compulsory Deposits, are proportionatelyallocated to different sectors based on the sectoralpattern of ‘other deposits’ indicated in the specialinformation. After estimating the sectoral figures,the deposits held under Account No.1 of theInternational Monetary Fund (IMF) with the RBI arededucted from the deposits estimated against theRest of the World sector and shown separately asloans from IMF. This modification is made in theaccounts of RBI sub-sector because the abovetransactions in the Rest of the World sector’saccounts are shown as loans to the official sector(RBI).

Bills Payable

‘Bills payable’ include (a) outstanding draftsissued among the offices of RBI (b) outstandingpayment orders issued by RBI for local paymentsand (c) outstanding balance in the remittanceclearance account. Since 1975-76, a specialreturn as on March 31, is being received fromthe regional offices of RBI. The amount of billspayable, as given in the Statement of Affairs, isallocated to different sectors on the basis of thesectoral pattern derived from this special return.

Other Liabilities

The extent of transactions in non-financialinstruments is excluded from ‘other liabilities’

by identifying such items. For this purpose, aspecial return is used.

Rupee and Small Coins

This item comprises the holdings of the Issueand the Banking Departments of the RBI in theform of rupee notes/coins of all denominationsof the Central Government and also any othercommemorative coins (even if they are of higherdenomination) issued by the Government ofIndia. Rupee notes/coins are shown as the RBI’sclaim on the Government Sector, because rupeenotes/coins are shown as the currency liabilityof the Government.

Gold Coin and Bullion

Stock of gold held by RBI in its vaults is shownagainst this head. The gold purchased by RBI,as part of its transactions, from the InternationalMonetary Fund (IMF) is also included here. Theincrease in the value of gold holdings due torevaluation is not shown under the financialflows accounts. This particular amount due torevaluation is shown against revaluation accountand, therefore, only the increase in the value ofgold due to rise in physical stock of gold isshown under the financial flows. It is consideredas a foreign asset and shown against the ‘Restof the World’ sector for the sectoral classification.

Foreign Assets

Foreign assets of RBI comprise ‘foreign securities’held in the Issue Department and ‘balances heldabroad’ in the Banking Department. Theseinclude short-term securities, cash balances andfixed deposits with foreign central banks andother major international commercial banks. Asthese relate to transactions of RBI with foreigngovernments/central banks and internationalinstitutions, these are classified against the ‘Restof the World’ sector under sectoral presentationand as ‘investments - foreign securities’ in theinstrument-wise classification.

Investments

The Statement of Affairs of RBI presents dataonly on aggregate investments. Hence, we takerecourse to a special return for details ofcomposition of such investments.

198


Loans and Advances

Data on loans and advances out of the NationalAgricultural Credit (Long Term Operations) Fund,the National Agricultural Credit (Stabilisation)Fund, the National Industrial Credit (Long TermOperations) Fund and loans from other fundsare separately available.5 Recipients of loans areclassified in the Statement of Affairs, as (a)Central Government, (b) State Governments andunion territories, (c) commercial banks, (d) co-operative banks and (e) financial corporations.‘Internal bills purchased and discounted’ are alsoincluded under loans and advances, as theseare the bills of commercial banks that arediscounted by RBI. Loans to employees forpurchase of cars, etc., are shown as loans tothe Household sector, whereas housing loans areclassified as loans to co-operative non-creditsocieties as a large part of such loans is givento the co-operative housing societies.

Other Assets

Since the details of ‘other assets’ are not reportedin the Statement of Affairs, a special return fromthe regional offices of RBI is utilised for thispurpose. The items of non-financial nature suchas dead stock account are excluded from other’assets.

b) Commercial Banks

The data on assets and liabilities of all scheduledcommercial banks (including RRBs) as on thelast reporting Friday of March are drawn fromthe return obtained under Section 42(2) of theReserve Bank of India Act, 1934 (hereafterreferred to as Section 42 return). Form X, amonthly return received in RBI under Section27 of the Banking Regulation Act, 1949, presentsdata on all items of assets and liabilitiesincluding those available in Section 42 returnfor all commercial banks and the data on March31 is considered to compile the accounts of thissub-sector. The details which are not availablefrom the Section 42 return are supplementedwith data available from the Form X return.Different survey results on bank credit, depositsand investments [viz., Basic Statistical Returns(BSR) 1, 4 and 5] are used for estimating sectoraldetails under these instruments. A brief account

of the instrument-wise compilation is presentedbelow:

Paid-up Capital

The data on paid-up capital are obtained fromthe Form X return which is available for fivegroups of banks, viz., (a) State Bank of Indiaand its subsidiaries, (b) nationalised banks,(c) other Indian scheduled banks (includingRRBs), (d) scheduled foreign banks and(e) functioning non-scheduled banks. Thesebanks are regrouped to work out the ownershipdetails of their paid-up capital into: (i) publicsector banks, (ii) RRBs and (iii) other Indianscheduled and (iv) non-scheduled banks(residual).

The RBI and Central Government hold the paid-up capital of public sector banks. However, it isobserved that the accounts of the Life InsuranceCorporation of India (LIC), still show investmentin shares of certain nationalised banks, perhaps,due to non-receipt of compensation. Therefore,to derive the figure for the Central Government’sshare, the LIC’s contribution is subtracted alongwith that of the RBI’s, from the total paid-upcapital of the public sector banks. In recentyears, public sector banks have been accessingthe primary market with public offer of theirequity shares. The ownership of paid-up capitalof RRBs is divided among the CentralGovernment, State Governments and commercialbanks in the ratio 50:15:35. Thus, the paid-upcapital of all the commercial banks is allocatedamong (a) RBI, (b) commercial banks, (c) LIC,(d) Central Government, (e) State Governmentsand (f) households.

Deposits

The data on deposits are obtained from theSection 42 return, which gives aggregate demandand time deposits. The particulars of ownershipof these deposits are estimated on the basis ofthe survey on ‘ownership of deposits withscheduled commercial banks’ as on the lastFriday of March, available through the BasicStatistical Return - 4. The ownership details areavailable by type of deposits, viz., current, saving,fixed and other deposits. The relationship of

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current, savings and fixed deposits available inForm X is applied separately to the aggregatedeposits ‘from others’ from the Section 42 return,to split-up the aggregate deposits into current,saving and fixed (including cash certificates)deposits. The deposits thus estimated areallocated among the various sectors on the basisof the ownership survey, separately for current,savings and fixed deposits. The ownership detailsof the deposits from banks are shown againstcommercial banks, which include Indiancommercial banks (both public and private sectorbanks), foreign resident banks (offices of foreignbanks operating in India) and co-operative banks.The deposits from others are classified intofinancial corporations, insurance companies/corporations, non-government provident funds,co-operative non-credit societies, non-governmentnon-financial companies, government (includinggovernment non-departmental undertakings), restof the world and household sector.

Bills Payable

Details of this item are given under bills payablein India and bills payable outside India. Thelatter part is shown against the Rest of Worldsector. In the absence of more details on theformer category, the total amount is shown as ‘sector not elsewhere classified ‘. In theinstrument-wise classification, this is shown as‘item not elsewhere classified’.

Branch Adjustments

The data under this head are available forbranch adjustments (a) with offices in India and(b) with offices outside India. While the secondcategory represents transactions with the Restof the World sector, the first category representsintra-commercial bank transactions. An item‘branch adjustments among offices in India’ alsoappears under the asset side.

Miscellaneous Liabilities

The data on this item are obtained from Form Xreturn. It comprises various items of financialand non-financial nature, such as, unclaimeddividends, staff gratuity account, investmentfluctuation reserves, provision for tax liability,

reserve for bad and doubtful debts, specialreserves, secret reserves, and interest accruedon deposits outstanding. A similar item, viz.,‘other intangible assets’ appears on the assetsside. It includes interest accrued on investments;advance tax paid less provision and tax deductedat source, sundries like suspense, temporaryadvance, security deposits, clearing and otheradjusting accounts. Miscellaneous liabilities netof ‘other intangible assets (excluding inter-commercial bank transactions)’ are assumed torepresent the financial part for FOF accounts.

Cash in Hand

Cash in hand is taken from the Section 42return. This item is split into bank notes andgovernment notes, as described in the accountsof RBI. Bank notes are classified against thebanking sector (RBI) while the government notesare shown under the government sector.

Balances with RBI and Banks, Money at Calland Short Notice

The data on these items are obtained from theSection 42 return under the sub-heads (a)balances with RBI, (b) balances with other banks- (i) in current account and (ii) other accountsand (c) money at call and short notice. The item,‘balances with other banks in current account’covers balances with commercial banks and co-operative banks. Its allocation into these twocategories of banks is made on the basis of theForm X return. Balances with commercial banksin other accounts are considered as fixeddeposits with commercial banks.

Investments

The Section 42 return in the case of scheduledbanks and Form X return in the case of non-scheduled banks are the main sources ofinformation on investments. The Section 42return furnishes data on (a) governmentsecurities, and (b) other approved securitiesseparately. The break-up of governmentsecurities into (i) central government securities,(ii) government treasury bills and (iii) stategovernment securities, is obtained on the basisof the details given in the Form X return. Other

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approved securities comprise securities approvedunder Section 5(a) of the Banking Regulation Act,1949. Their sectoral allocation is worked out forboth the scheduled and the non-scheduled bankson the basis of ‘survey of investments ofscheduled commercial banks as on March 31’(Basic Statistical Return - 5) conducted by RBI.

Bank Credit

Total bank credit consists of ‘loans, cash-creditsand overdrafts’, ‘inland bills-purchased anddiscounted’ and ‘foreign bills-purchased anddiscounted’. The first category represents alltypes of credit facilities (other than bills) suchas demand loans, term loans, cash-credits,overdrafts, packing credits. Inland bills representbills drawn and payable in India includingdemand drafts and cheques purchased anddiscounted (excluding bills rediscounted with RBIand other financial institutions). Foreign billsinclude all import and export bills includingdemand drafts drawn in foreign currencies andpayable in India. The data on total bank creditcollected from the Section 42 return, areavailable separately in respect of advances tobanks and others. Since ‘advances to banks’include advances to co-operative banks,commercial banks in India and banks outsideIndia, these details are worked out on the basisof the Form X return. Advances to ‘others’ relateto the credit extended to other co-operativesocieties, other financial institutions, non-government non-financial companies, government(including government companies) andhouseholds. The detailed information on bankcredit according to organisation and occupation(industrial activity) is available in the survey onoutstanding credit of scheduled commercialbanks (Basic Statistical Return-1). Theoccupational groups classified for the purposeare: (i) agriculture, (ii) medium & large industry,(iii) small-scale industry, (iv) wholesale trade-foodprocurement purpose and others, (v) otherpriority sectors, namely, retail trade, personaland professional services and transportoperators, and (vi) all others (including personalloans). Under these occupational groups, theHousehold sector covers institutions likepartnerships, proprietary concerns, joint familiesand individuals. Besides, the amount shown

under credit limits of Rs.25,000 and less is alsoshown as loan to the Household sector. Thedetails of credit for food procurement operationsto Central and State Government agencies areas per the sectoral deployment of gross bankcredit, as reported in the RBI’s Annual Report.The occupational group, ‘others’ includes loansto commercial banks, co-operative banks, otherfinancial institutions and others. Since bankcredit given in Section 42 return excludes inter-bank credit, such credit under ‘others’ is notconsidered while working out the sectoralclassification of bank credit.

c) Co-operative Banks and Credit Societies

As already mentioned, the primary data onassets and liabilities of all these co-operativesare obtained from Statistical Statements Relatingto Co-operative Movement in India - Part - I -Credit Societies, published by National Bank forAgriculture and Rural Development (hereafterreferred to as Statistical Statements). SinceStatistical Statements do not furnish the sectoraldetails of many items in the assets and liabilitiesof co-operative banks, a special return isobtained from different state and district centralco-operatives. The sectoral proportions, thusobtained, are applied on the different balancesheet items of co-operative banks and societiesat the aggregate level.

3.5.2. Other Financial Institutions (OFI)

The detailed coverage of the OFI sector ispresented in Annex 3.2. However, in this section,for the convenience of exposition and becauseof similarities in balance sheets, the developmentfinancial institutions, Unit Trust of India andfinancial and investment companies are clubbedtogether under financial corporations andcompanies. Hence, we shall discuss thecompilation for the OFI sector under the heads:(a) financial corporations and companies,(b) insurance companies/corporations, (c) mutualfunds (other than UTI), and (d) non-governmentprovident funds.

a) Financial Corporations and Companies

The Annual Report and accounts of thecorporations form the basic source in respect of

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most of the financial corporations. However, forthe 26 State Industrial Development Corporations(SIDCs), a special return is received from IDBI.On the other hand, RBI study on ‘finances offinancial and investment companies’ forms thebasic source for the financial companies. Sincethe study presents data only for a sample ofnon-government financial companies, the globalfigures are estimated on the basis of the shareof the paid-up capital covered in these studies.

Paid-up Capital

The paid-up capital of financial institutions issubscribed by different categories of economicunits. Broadly, the categories are classified into(i) RBI, (ii) commercial banks, (iii) co-operativebanks, (iv) financial corporations, (v) insurancecompanies/corporations, (vi) CentralGovernment, (vii) State Governments, (viii) Restof the World and (ix) Households. These detailsare culled out either from the Annual Reports orobtained through special return from theinstitutions concerned. In the case of financialand investment companies, the total paid-upcapital is available. Its ownership break-up isworked out by subtracting the intra-sectoralinvestment by financial and investmentcompanies and attributing the residual tohouseholds.

Bonds/Debentures

Most of the financial institutions covered in thissub-sector issue bonds and debentures. Inrespect of IDBI, IFCI, ICICI, IIBI (the erstwhileIRBI), HUDCO, and NABARD, the details of thesubscribers to the bonds are obtained fromindividual institutions. The particulars of SFCsare received from the IDBI. The sectoral breakupfor each of the institutions is worked out on theassumption that the sectoral pattern of redeemedsecurities is the same as that of the securitiesissued during the year.

Initial Capital & Unit Capital

The initial capital and unit capital are issuedonly by the Unit Trust of India (UTI). The investordetails of initial capital are received from theUTI through a special return.

Borrowings

Each financial corporation reports its sources ofborrowing which are classified into (a) RBI,(b) commercial banks, (c) financial corporations,(d) insurance, (e) Central Government, (f) StateGovernments, (g) Rest of the World, and(h) others.

Deposits

Another source of funds for institutions like,SFCs, ICICI, SIDCs and IDBI is acceptance ofdeposits. The deposits with IDBI are thosereceived under the Companies Deposit (surchargeon income tax) Scheme, 1976. The data onhouseholds’ deposits with non-banking financial(government and non-government) companies aredrawn from the RBI survey on ‘growth of depositswith non-banking companies’.

Other Liabilities

Items of miscellaneous transactions, which areincluded under this head differ from oneinstitution to another. For example, they coverapplication money for shares/bonds/debentures,sundry creditors, interest accrued and due,interest accrued but not due, unclaimeddividends, miscellaneous liabilities and suchother items which are claims of other economicunits. The IFCI and SFCs show their employees’provident fund under other liabilities. This itemis shown as a claim of the non-governmentprovident fund sub-sector in the form ofdeposits because all the non-governmentprovident funds are shown under one sub-sectorwherein the household sector is the claimantof the fund.

Cash and Bank Balances

All the corporations present the data separatelyon cash in hand and bank balances undercurrent and fixed deposits with commercialbanks. Balances with banks outside India areshown as deposits with the Rest of the World.

Loans and Advances

Loans and advances, bills of exchange purchasedand discounted, and participation certificates areincluded under this head. The sectoral

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particulars of loans are obtained from either theAnnual Reports/special returns, or estimated onthe basis of both the sources. Survey on financialand investment companies provides the detailsof loans against (i) subsidiary companies, (ii)holding companies and companies in the samegroup, (iii) hire purchase and (iv) others.

Investments

The particulars of investments differ from oneinstitution to another. Financial corporationsinvest in debentures of co-operative banks,central and state government securities, shares/debentures of public and private sectorcompanies, financial corporations (intra sub-sector), bonds of state electricity boards, andothers (unclassified).

Other Assets

This item covers miscellaneous assets, such ascash in transit, application money oninvestments, cheques sent for collection and onhand, sundry debtors, deposit money towardspurchase of shares, sundry advances, bookdebts, and interest accrued on investments.Sectoral particulars under these categories arenot available except for a few items. These itemsare shown as ‘other items not elsewhereclassified’ in the instrument-wise classificationand ‘sector not elsewhere classified’ for sectoralpresentation.

b) Insurance

Paid-up Capital

The paid-up capital of the LIC and GIC is heldby the Central Government while that of thesubsidiaries of GIC is held by the GIC. Thecapital of DICGC is held by the RBI whereasthe Central Government owns the paid-up capitalof ECGC.

Life Insurance Fund

The LIC receives life insurance premiums (shownas life fund) from individuals (Household sector),and non-residents (Rest of the World Sector), thedetails of which are published in the AnnualReport of the LIC.

Borrowings

General insurance companies, besides theirinsurance fund under different schemes, obtainfunds from commercial banks in the form ofloans and overdrafts.

Other Liabilities

Items such as sundry creditors, amount payableto former shareholders, net liability in respectof closed branches abroad, unclaimed dividends,and a few other items classified under ‘otherliabilities’ are treated as other financialinstruments and included in the items ‘notelsewhere classified’


Bifurcation of the item into ‘cash in hand’ and‘current account balances’ is obtained from theinsurance companies with a break-up of the cashbalances in India and held outside India. ‘Cashheld outside India’ is shown as deposits withthe Rest of the World sector. Cash in hand isfurther split into ‘RBI notes’ and ‘one rupee notesand coins’.

Loans and Advances

The sectoral particulars of loans and advancesare culled out from their Annual Reports. Theassets item ‘outstanding premium consideredgood and doubtful’ in the case of life insurancebusiness is divided into two components, viz.,relating to business in India and outside India.The component ‘in India’ of this item is shownunder the Household sector whereas the othercomponent, ‘outside India’, is included under theRest of the World sector.

c) Mutual Funds

With the setting up of mutual funds (other thanUTI) initially by the public sector banks andfinancial institutions and later by the privatesector, the coverage of the Other FinancialInstitution sector has increased. Accordingly, theFOF accounts have started presenting themutual funds separately from 1987–88 onwards.In the earlier articles, due to non-availability ofsectoral details, the subscriptions for mutual

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funds were assumed to be coming entirely fromthe Household sector. Subsequently, the sector-wise allocation of mutual funds was made onthe basis of proportions worked out from thedata obtained from the records of RBI, andSecurities and Exchange Board of India (SEBI).Presently, the receipt of information from themutual funds has been regularised by obtainingthe data on their sources and uses of funds asper the specially designed format.

d) Non-Government Provident Funds

Provident fund contribution of employees as alsoof employers, contributory pension fund anddeposit-linked insurance fund are the sourcesof funds for this sub-sector. The Householdsector is not only the claimant for the first twocategories of funds but also for the deposit linkedinsurance fund, which is paid on the death ofthe employee insured.

Provident Fund

The Annual Reports of EPF, and provident fundscovering employees of coal mines, Assam teaplantations, and seamen provide data oninvestments, made out of (i) contributionsreceived, (ii) interest credited, (iii) interest incomereceived on previous investment and (iv)reinvestments from redeemed securities.However, the investment details against thesecategories are not available except the amountof redeemed securities. The investments out ofthe redeemed securities are netted from the grossinvestments to arrive at the total net providentfund contributions. The contributions, thusderived, are invested as per the guidelines issuedby the Central Government from time to time.In the case of RBI, the employees’ provident fundis maintained as deposits with RBI.

Family Pension Fund

Employees’ Family Pension Scheme came intoforce in 1971 and it was adopted byorganisations of EPF Scheme, coal mines andAssam tea plantations. The fund is contributedequally by the employees, the employers and theCentral Government and is treated as the claimof the Household sector. The total amount of

this fund is deposited with the CentralGovernment.

Deposit Linked Insurance Fund

The Employees’ Deposit Linked InsuranceScheme came into force with effect from August1, 1976. Under this Scheme, contributions aremade by the employers and the CentralGovernment. Employees are not required tocontribute to the insurance fund. The benefit ofthe Scheme is given to an employee, who is amember of the Scheme, only on his death duringhis membership and hence contributions to thisfund are not treated as direct claim of theHousehold sector. The contributions receivedtowards the fund are to be invested generally in(a) central government securities, (b) smallsavings and (c) special deposits with CentralGovernment.

3.5.3. Private Corporate Business Sector

a) Co-operative Non-Credit Societies

The details about these societies pertaining toJune 30, are published annually in StatisticalStatements relating to Co-operative Movement inIndia - Part II: Co-operative Non-Credit Societies,by NABARD. As the details given in the StatisticalStatements do not meet all the requirements forFOF accounts, sectoral classification of certaininstruments is worked out on some assumptions.Most of the societies function at national, state,central and primary levels. The first three levelsof societies are assumed to represent apexsocieties and will have transactions amongthemselves to a large extent. The primarysocieties have their business directly with thehouseholds besides their transactions with theapex societies.

b) Non-Government Non-Financial Companies

The RBI studies on finances of public and privatelimited companies form the basic source for thecompilation of FOF accounts of this sub-sector.As the studies include only limited number ofcompanies, the data presented therein areadjusted on the basis of the global paid-upcapital of the public and the private limitedcompanies, as released by DCA.

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Paid-up Capital

The studies on company finances present totalshare capital with its breakup into paid-upcapital and forfeited capital. As forfeited sharesdo not create any liability to the company, theyare not included under financial FOF accountsbut are shown along with reserves and surplus.Details of paid-up capital into ordinary,preference and bonus shares are also available.Bonus shares are shares issued by capitalizationof reserves of the company whereas ordinary andpreference shares are subscribed by varioussectors. However, in FOF accounts, ordinaryshares and preference shares are shown together.The amounts shown against ordinary andpreference shares are exclusive of shareapplication money and allotment money inrespect of new shares that are included undercurrent liabilities. The total paid-up capitalincluding bonus shares is further segregatedaccording to its ownership on the basis of thesectoral accounts, which report their investmentsin the shares of non-government non-financialcompanies.

Borrowings

The RBI studies on company finances providedetails of borrowings, into: (i) banks, (ii) IFCIand SFCs, (iii) other institutional agencies (i.e.,Indian financial institutions like IDBI, ICICI,SIDCs, LIC and UTI and internationalinstitutions), (iv) government and semi-government agencies and (v) others. The last item‘others’ includes the deposits accepted by thecompanies from the public. All deposits shownby the companies in their accounts undersecured/unsecured loans only are covered underthe head ‘deposits’, which exclude the depositsappearing under current liabilities of thecompanies.

Trade Dues and Other Current Liabilities

Under this head, the RBI studies on companyfinances publish the details on (i) sundrycreditors, (ii) liabilities to subsidiary and holdingcompanies, (iii) interest on loans and unclaimeddividends, (iv) deposits from customers, agents,etc. and (v) others. The first category includesliabilities for goods supplied, liabilities for

expenses and other finance. A similar item,‘sundry debtors’ appears under assets.

It includes sale of goods on a deferred paymentsbasis to various parties, such as, other non-government companies, governmentundertakings, partnership and proprietaryconcerns, the details of which are however notavailable. In the absence of any ownershipparticulars, it is assumed that the intra-corporatetransactions are excluded by obtaining sundrycreditors net of sundry debtors and the differenceis taken as the amount received from/paid tothe Household sector. The remaining componentsof this sub-head are shown as ‘other currentliabilities’ and classified as items’ not elsewhereclassified ‘ under the instruments and ‘sectornot elsewhere classified’ for the sectoral allocation.


Cash in hand, deposits with commercial banks anddeposits with post office savings banks are shownagainst this sub-head. As mentioned earlier forother sectors, cash in hand is split into bank notesand government notes. Deposits with commercialbanks cover the fixed, current and other depositaccounts. Deposits with post office saving banksare shown under ‘small savings’.

Investments

Investments by the companies in the RBI studiesare classified into investment in foreign securitiesand in Indian securities. The former includesforeign government securities and other foreignsecurities inclusive of investments in foreignsubsidiaries of Indian companies. Indiansecurities relate to all quoted securities, suchas, government and semi-government securities,industrial securities, shares and debentures ofsubsidiary companies or companies in the samegroup or holding companies, and otherinvestments. Industrial securities which includeshares and debentures of joint stock companiesand subsidiary/holding/same group companiesare taken as intra-corporate investments.

Loans and Advances and Other Debit Balances

Loans and advances covered under this headinclude loans to subsidiary companies,

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companies under the same group and holdingcompanies, and others. All loans, other than to‘others’, are intra-corporate loans and advanceswhereas loans to others are shown as ‘sectornot elsewhere classified’ as no details areavailable.

3.5.4. Government Sector

The procedure adopted for the compilation of theaccounts of each of the sub-sectors is describedbelow:

a) Central Government

The document, Economic and FunctionalClassification of the Central Government Budget(hereafter referred to as the EconomicClassification) published by the Department ofEconomic Affairs, Ministry of Finance,Government of India, forms the basic source ofdata to compile the accounts of this sub-sector.Unlike the case of financial institutions andcorporate sector, for which the balance sheetdata are available, the Economic Classificationpresents a set of six accounts reclassifying datagiven in the budget of the Central Government.Accounts 4 and 5 provide data on changes infinancial liabilities and assets of the CentralGovernment administration and its departmentalcommercial undertakings, such as, railways,posts and telegraphs, and defence. The EconomicClassification, however, does not present thesectoral break-up of market loans, treasury bills,small savings, other types of borrowings,disbursement of funds through investments, andloans and advances. For arriving at the sectoralbreak-up of some of the government’s sourcesand uses of funds, the information from variousother sources is used. The sectoral particularsof these various items are given below:

Market Loans

Market loans consist of interest bearing loans,non-interest bearing loans, compensation bonds,other bonds and other loans. The amount ofmarket loans published in the EconomicClassification is exclusive of treasury bills thatare funded into long-term securities. As suchthe amount of net market loans (gross receipts

minus repayments) is adjusted to include thefunded treasury bills, the data on which areavailable in the Explanatory Memorandum to theCentral Government Budget. On the basis of RBIsurvey on ownership of government debt,categories of ownership of market loans areworked out as follows: (i) RBI (own account), (ii)commercial banks, (iii) co-operative banks, (iv)financial corporations, (v) insurance, (vi)provident funds, (vii) joint stock companies, (viii)Central and State Governments, (ix) localauthorities including port trusts, (x) stateelectricity boards and state road transportcorporations, (xi) non-residents, (xii) householdscomprising individuals, trusts and RBI (onaccount of others), and (xiii) others.

Treasury Bills

The data on treasury bills (net) available in theEconomic Classification include the amount ofTreasury bills funded into long term securities.As explained under market loans, data on fundedbills taken from the Explanatory Memorandumto Central Government Budget, are deducted fromtotal treasury bills (net) to show the treasurybills excluding the amount of funded bills.Ownership particulars of these bills are availablein the return received from the Department ofGovernment and Bank Accounts (DGBA) of RBI.

External Debt

The Economic Classification presents grossborrowings of the Central Government from theRest of the World and their repayments. Itincludes data on government’s borrowings fromvarious international financial organisations/agencies, foreign governments as also the specialcredits from oil exporting countries, and IMFtrust fund loans. Gross borrowings minusrepayments are shown as the net borrowings ofthe Central Government from the Rest of theWorld sector.

Small Savings

Small savings comprise savings deposits withpost offices and savings certificates. Theseinclude post office savings bank deposits,cumulative time deposits, time deposits, national

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saving certificates, national savings annuitycertificates, national development bonds, etc.Their ownership details are derived on the basisof investing sectors’ accounts. It is observed fromthe accounts that non-government providentfunds, local authorities, and non-governmentnon-financial companies invest in small savings.The residual, after deducting the investment ofthe above sectors in small savings, is assumedto have been invested by the Household sector.

Provident Fund

The provident fund of the employees of theCentral Government and the amounts collectedby the government from the public under thePublic Provident Fund Scheme, 1968, are coveredunder this head. This is treated as a claim ofthe Household sector.

Deposits of Non-Government Provident Funds

The Central Government introduced the specialdeposit scheme in July 1975 to provide a betterreturn to the non-government provident,superannuation and gratuity funds. These detailsare given in the Economic Classification and aretreated as claims of the non-governmentprovident fund sub-sector under the instrument,‘deposits - other deposits’.

Special Bearer Bonds

The Economic Classification also gives details ofbonds issued under the voluntary disclosurescheme and special bearer bonds that are issuedby the Central Government to mobilise additionalresources. These are treated as claims of theHousehold sector on the government.

Other Debt

Miscellaneous capital receipts presented in theEconomic Classification include various items,which are shown separately in FOF accounts.For example, ‘postal insurance and life annuityfund’ is classified as life insurance fund held bythe Household sector. One rupee notes and coinsrepresent the liability of the Central Governmentin the form of currency. The data on one rupeenotes and coins are collected from the tables

relating to ‘Money Stock Measures’ published inthe RBI Bulletin. The holding of one rupee notesand coins by RBI has been added to this amountfor deriving the total liability of the CentralGovernment under this head. The one rupeenotes and coins are split-up into claims ofvarious sectors using the estimated holdings ofrupee coin and small coins as presented in eachsector account. The detailed procedure ofestimation is described in RBI sub-sectoraccount. The residual of miscellaneous capitalreceipts after deducting the items separatelyshown in FOF accounts, is treated as part ofother debt.

Investments

Account No. 4 of the Economic Classificationpresents data on changes in financial assets ofthe Central Government. This account providesdetails of investments into shares of governmentcompanies - financial and others - and othercompanies. Financial companies consist ofbanking institutions, financial corporations andinsurance corporations in the public sector.Other companies of government relate to thenon-financial non-departmental undertakings.Particulars of financial companies into the abovethree categories are obtained from their annualaccounts and the publication Public EnterprisesSurvey of the Bureau of Public Enterprises,Ministry of Industry, Government of India. Othercompanies refer to non-government non-financialcompanies, which may belong to private and co-operative sectors, and also joint sector in whichthe Central Government’s holding in the capitalis less than 50 per cent. In the absence of detailsof other companies, these are shown against‘sector not elsewhere classified’.

Loans and Advances

Particulars of disbursement of loans andadvances are given against (i) loans for capitalformation and (ii) other loans. The repaymentsof loans to the Central Government are, however,shown only against States and union territories,and others. Institutional details of disbursementof loans for capital formation and other loansare available against (I) States and unionterritories, (ii) local authorities, (iii) non-

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departmental commercial undertakings -financial and others, (iv) foreign governments and(v) others.

Cash Balances

The Economic Classification presents the totalcash balances of the Central Government in itsAccount No. 6 as increase/decrease in cashbalances. This head includes the cash intreasuries and deposits with RBI. However, cashwith departmental offices (including Posts,Telecommunication, Defence and Railways) is notcovered under this head. These details areobtained from the Finance Accounts of theCentral Government. Further, total cash intreasuries and with departmental offices is split-up to show bank notes and government notesand coins.

Other Items

The data on subscriptions to internationalfinancial organisations and net purchase ofdomestic gold and silver are given in theEconomic Classification. The former is shown asa claim on the ‘Rest of the World’ sector whereasthe latter is shown as ‘sector/item not elsewhereclassified’. Cash with the India Supply Mission,SDRs at the IMF, and suspense account andremittance with the RBI are classified as depositswith the Rest of the World, investment in foreignsecurities (foreign exchange assets), and depositswith the RBI, respectively.

b) State Governments and Union Territories

The Combined Finance and Revenue Accounts(CFRA) of Union and State Governments in Indiapublished by the Comptroller and AuditorGeneral of India, Government of India, providedata in respect of all State Governments.However, this publication is available with aconsiderable time lag. The primary data sourcefor the CFRA is Finance Accounts of StateGovernments published by the Auditor Generalof each State. This publication is also availablewith a lag. Hence the basic source for this sub-sector’s FOF accounts is the RBI study onfinances of State Governments, prepared on thebasis of State Government budgets. The

instrument-wise discussion of this sub-sector ispresented below:

Market Loans

Market loans and bonds (covering current andexpired loans) floated in the market by the StateGovernments, the various compensation bonds,housing bonds, etc. are covered under this head.The budget documents or the ‘Finance Accounts’of the State Governments present only grossreceipts and repayments of the market loans andbonds. The particulars of ownership are derivedfrom the Statement on “ Ownership of Centraland State Government Securities “, published inthe Report on Currency and Finance, RBI for theperiod of this study.6 Investments in StateGovernments’ securities from (i) cash balanceinvestment account, (ii) sinking fund investmentaccount, (iii) zamindari abolition fund account,and (iv) other accounts of the State Governments,are treated as intra-government investments.

Borrowings

Borrowings by way of (i) ways and meansadvances from RBI, (ii) overdrafts from RBI and(iii) loans and advances from banks, otherinstitutions and Central Government are coveredunder this head.

Provident Funds and Others

This instrument known as unfunded debt,includes provident funds of State Governmentemployees (titled as state provident funds), Stateinsurance fund and others. State provident fundsand insurance fund are treated as claims of theHousehold sector and shown separately. Receiptsnot of payments are reported here. The residualamount of unfunded debt is shown under‘sector/items not elsewhere classified’ undersectoral/instrument-wise classification.

Cash Balances

The data on cash at treasuries, balances at RBIand other commercial banks are obtained fromeither CFRA or the Finance Accounts of eachState Government. Amounts shown against (i)cash with departmental offices and (ii) permanentcash imprest are also included under cash

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balances held by the State Governments’administration.

Loans & Advances

The RBI studies on ‘Finances of StateGovernments’ provide details on total loans andadvances of all State Governments; but theseare not sufficient for the purpose of FOFaccounts. Therefore, details of disbursements andreceipts of loans are culled out from the Statebudget documents for the following sub-sectors:(i) cooperative banks and credit societies, (ii)financial corporations, (iii) co-operative non-creditsocieties, (iv) non-governments, (v) housingboards, (vi) local authorities, (vii) state electricityboards, (viii) other non-departmental commercialundertakings of government, (ix) households and(x) others (unclassified).

c) Local Authorities

This sub-sector in principle should cover porttrusts, municipal corporations, municipalitiesand panchayats. In the absence of data on localself-governments, the accounts of this sub-sectorare prepared covering only the major port trusts(11 in number) on the basis of their AnnualReports.7

d) Non-Departmental Non-FinancialUndertakings

This sub-sector covers all government non-financial companies owned either singly or jointlyby Central, State or local governments, and Stateelectricity boards. In the case of the companiesowned by the Central Government, the data ontheir assets and liabilities are available in thePublic Enterprises Survey. This publication coverscompanies under construction and runningenterprises, which are promotional, financial andnon-financial by their activity. However, thefinancial companies are not included in this sub-sector as they are covered in another sector viz.,‘Other Financial Institutions’. In the case of Stateelectricity boards (including Damodar ValleyCorporation), the necessary data are obtainedfrom their Annual Reports. The methodology forCentral and State Government companies ispresented below:

Paid-up Capital

The Public Enterprises Survey (PES) provides thebalance sheet data for Central Governmentrunning enterprises and companies underconstruction. The ownership details of the paid-up capital are available against the followingheads: (i) Central Government, (ii) StateGovernments, (iii) holding companies, (iv)financial institutions (Indian), (v) foreign partiesand (vi) others. Similar break-ups for StateGovernment companies are estimated on thebasis of past data.

Borrowings

As in the case of paid-up capital, sectoralborrowings in respect of Central Governmentcompanies, are drawn from a subsidiarystatement on ‘details of loans’, which gives: (i)working capital loan from the CentralGovernment and (ii) other borrowings from (a)Central Government, (b) State Governments, (c)holding companies, (d) foreign parties includingdeferred credit, (e) financial institutions and (f)others.

Current Liabilities and Provisions

Current liabilities are divided into (i) sundrycreditors, (ii) liability to subsidiary and holdingcompanies, (iii) deposits from customers, agents,etc. and (iv) other current liabilities. Sundrycreditors are treated as trade credit, whereas thesecond item is an intra-government companies’transaction. Deposits from customers and othercurrent liabilities are shown as other liabilitieswithout allocating them to any specified sector.Miscellaneous non-current liabilities are alsoshown under ‘ unclassified sector ‘ along withother liabilities.

Investments

The Public Enterprises Survey provides data ontotal investments excluding investment insubsidiary companies in the case of CentralGovernment companies. The break-up ofinvestments is worked out on the basis of RBIStudy, into (i) government securities, (ii) semi-government securities, (iii) industrial securities,(iv) foreign securities, and (v) others.

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Loans & Advances and Sundry Debtors

Details of loans and advances extended byCentral and State Government companies, exceptthose to their subsidiary and holding companies,are not available. Accordingly, the total amountunder this head, other than loans to subsidiaryand holding companies, is shown under‘unclassified sector’. The amount under sundrydebtors is shown as trade debt and could notbe allocated to any identifiable sector for wantof details.

3.5.5. Rest of the World

Transactions of domestic sectors with foreignunits that are effected through the medium ofmoney and credit are recorded in the accountsof the Rest of the World. The RBI publishesstatistics on India’s overall balance of payments(BOP) classified into current and capitalaccounts. The BOP account records transactionsin the form of credits or debits. While the formercovers increase in liabilities and decrease inassets, the latter covers decrease in liabilitiesand increase in assets. Secondly, data arerecorded on ‘cash basis’, as distinguished from‘accrual basis’, that is, when inflow or outflowof money actually takes place across theboundary. Hence, the accounts do not show theentries on payable or receivables. In contrast tothe BOP account, FOF accounts are constructedfrom the stand-point of the Rest of the World.As such, the credits and debits recorded in theBOP statistics will become debits and credits,respectively, for the Rest of the World. Thecapital account transactions are divided intothree sectors, viz., (i) private, (ii) banking and(iii) official. The details of capital accounttransactions as obtained from the records of RBIare discussed below:

Private Capital

Transactions recorded under this category arepresented under ‘long-term’ and ‘short-term’capital. Flows relating to loans, investment inshares, and other assets are categorised as longterm whereas the short-term capital coversmainly short-term borrowings and theirrepatriation. In FOF accounts, these flows areclassified into deposits, loans, investments and

other miscellaneous transactions. In the BOPstatistics, private capital also includes thetransactions of ICICI and insurance companies,which, for the purpose of FOF accounts, areclassified under ‘Other Financial Institutions’sector. Besides, transactions in non-residentexternal rupee account and in various foreigncurrency non-resident accounts are recordedunder miscellaneous receipts and payments ofprivate capital. These are classified as depositswith commercial banks. Further, the privatecapital account includes investments by oilcompanies directly or through import of capitalequipment in India without payment in cash.Since nationalisation of oil companies,transactions of these companies are included inthe official sector. Thus, for the purpose of FOFaccounts, private capital is classified into (a)banking sector, (b) private corporate sector, (c)other financial institutions, and (d) unidentified,against each type of instruments, viz., deposits,loans, investments, and others.

Banking Capital

‘Banking capital’ in the BOP accounts excludesRBI’s transactions and corresponds to changesin the foreign assets and liabilities of banks/financial institutions, which are authorised todeal in foreign exchange [known as AuthorisedDealers (ADs)]. ADs’ foreign exchange assetsconsist of (a) foreign currency holdings, and (b)rupee overdrafts to non-resident banks. Theirforeign liabilities comprise (a) foreign currencyliabilities, and (b) rupee liabilities to non-resident banks as well as official and semi-official institutions. From the Rest of the World’sview point, ADs’ foreign assets constitute itsliabilities and ADs’ foreign liabilities constituteits assets. ‘Banking capital’ is classified asdeposits of the commercial banks in FOFaccounts.

Official Capital

Capital account transactions of RBI, and Centraland State Governments are covered here. Thesedata are available under (i) loans, (ii)amortization, (iii) reserves, and (iv) miscellaneous.The coverage and classification of these itemsare explained below:

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Loans

In the BOP statistics, credits reported against‘loans’ comprise loans received by the Centraland State Governments from foreigngovernments/international financial institutions,Trust Fund loans from IMF and other purchase(drawings) from IMF. Disbursement of officialloans and credits extended to foreigngovernments and repurchases from the IMF areshown under ‘debits’. Thus, the receipt of loansby India appears as an increase in assets forthe Rest of the World, and India’s disbursementof loans to foreign governments as a rise inliabilities for it. The transactions with IMF,namely, drawings and repurchases, which areshown as official loan receipts and repayments,are maintained under IMF Account No. 1 withRBI indicating liability of RBI. But Fund AccountNo. 1 is treated as liability of the governmentand is shown as loan to government in the FOFaccounts. Such a problem is not faced with theTrust Fund loan from the IMF availed of in the1970s, since it is not a purchase and is,therefore, shown as a loan to the government.

Amortization

The repayment of loans by the government isrecorded as debits, and recovery of loans fromforeign governments as credits under the head‘amortization’. From the Rest of the Worldsector’s viewpoint, credits are shown as decreasein liabilities (loans) and debits as decrease inassets (loans). These transactions are shownagainst the Central Government for sectoralclassification.

Reserves

Movements in reserves comprise change inofficial reserve holdings in foreign currencies,gold and Special Drawing Rights (SDRs). Thedata on foreign exchange assets held by RBI arerecorded in the accounts of RBI; SDRs are heldby the government.

Miscellaneous

This item covers all other capital transactionson government account whether long or short-term including the movements in rupee balances

held with RBI by non-resident governments,semi-government and international institutions.

3.5.6. Household Sector

As already mentioned earlier, all entities whichcould not be classified in the other five sectorsdescribed above, are placed under this sector.There is no independent balance sheet or assetand liability accounts for the household sector.However, the sources and uses of funds accountsfor this sector are prepared indirectly bytransferring the transactions identified in other5 sectors against households to this sectoraccounts. In the process sources/uses of fundsreported in other sectors become uses/sourcesof households. As described earlier, householdholdings in different instruments or theirliabilities are estimated either through surveysor as residual by netting the accounts of otherorganized sectors. The net uses of funds of thehousehold sector, in effect, constitute thefinancial savings of the household sector. A briefdescription of the instrument-wise methodologyfor the household sector is presented below.

a. Uses of Funds Accounts

i) Currency

Drawn from sources of RBI andGovernment sectors. On the basis ofpast trends of currency holding of thehousehold and non-household sectors,93 per cent of ‘currency with public’issued in a financial year is treated ashousehold contribution.

ii) Commercial Bank DepositsSources of funds of commercial banksreport Deposits and those estimatedagainst households are shown underthis item. Estimation procedure isdescribed under ‘commercial banks’accounts.

iii) Deposits with Co-operative Credit & Non-Credit Societies

i) Data are drawn from the accounts ofthese cooperatives described earlier.Deposits with primary societies aretreated as household deposits.

ii) For other credit societies and co-operative banks, household depositsare estimated based on the ownership

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pattern of deposits, as obtained inadditional returns by RBI.

iii) Pending the availability of NABARDpublication, deposits with co-operative banks and credit societiesare estimated based on co-operativebank deposits, as available in RBISection 42 return.

iv) Household deposits with non-creditsocieties are estimated similarly.

iv) Deposits with Non-Banking Companies(NBCs)

1) Household deposits with the NBCsexcepting the electricity boards aredirectly obtained from the articlespublished in RBI Bulletin.

2) Household share in security depositswith state electricity boards isworked out on the basis ofhousehold share in electricityconsumption.

v) Trade Debt (Net)

This item is drawn from sources ofprivate corporate sector. It is estimatedas change of trade dues in respect ofsundry creditors minus change tosundry debtors.

vi) Shares & Debentures of Non-Government Companies

1) Household investment in thisinstrument is drawn from sources ofnon-government private non-financial companies. Estimationprocedure has been described thereunder Para 4.4.3.

2) The household sector investment inshares and debentures of financialcompanies/co-operatives is alsoarrived at in a similar manner fromaccounts of other financialinstitutions sub-sector.

vii) Shares & Debentures of Co-operativebanks and societies

Share capital of co-operative banks,credit and non-credit societiescontributed by individuals and others asobtained in NABARD publication istreated as household investment.

viii) Units of UTI & Other Mutual FundsThis item appears under sources offinancial corporations and companies.Figures reported against households areshown here. i) Household investment inunits of Unit Trust of India (UTI) isobtained by applying the proportion ofhousehold sector (i.e. adults/individuals,minors, Hindu-Undivided Family andtrust/society) in total sales, net ofrepurchases, to the increase in unitcapital during the year.

ii) Household investment in othermutual funds is obtained directly byRBI through a special return. In caserequired, household proportionsworked out for the public sectormutual funds and UTI are made useof to arrive at the householdinvestment in private mutual funds.

ix) Claims on Government

Households claim on Governmentincludes their investment in small savingsand Government securities. Estimation ofhousehold investments is described in thecentral government sub-sector.

x) Life Insurance Funds

This component cover life insurancefund reported under insurance sub-sector and postal/state insurance fundreported in government sector.

xi) Provident and Pension FundsHousehold savings in provident fund(PF) are drawn from the accounts(sources) of provident fund sub-sectorand government sector. The coverageand procedure of estimation has beendetailed in that section.

b. Sources of Funds Accounts

Sources of funds mainly comprisehouseholds’ borrowing from commercialbanks, RBI, cooperative banks and creditsocieties, cooperative non-credit societies,other financial corporation and companies,government. These data are reported under‘loans and advances’ under their uses offunds are transferred as ‘sources’ of fundsfor household sector. The procedure toestimate household borrowing from these hasbeen described in the sub-sections.

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1. Marketing Societies:

1.1 National

1.2 State

1.3 Central

1.4 Primary

2. Cotton Marketing Societies:

2.1 State

2.2 Central

2.3 Primary

3. Fruits and Vegetables MarketingSocieties:

3.1 State

3.2 Central

3.3 Primary

4. Arecanut Marketing Societies

5. Tobacco Marketing Societies:

5.1 State

5.2 Central

5.3 Primary

6. Coconut Marketing Societies

7. Sugarcane Supply Marketing Societies:

7.1 State

7.2 Central

7.3 Primary

8. Other Specialised AgriculturalCommodities Marketing Societies:

8.1 State

8.2 Central

8.3 Primary

9. General Purpose Marketing Societies:

9.1 National

9.2 State

9.3 Central

10. Marketing Societies:

10.1 State

10.2 Central

10.3 Primary

Annex 3.1: List of Cooperative Non-Credit Societies

11. Sugar Factory Societies

12. Cotton Ginning and Pressing Societies (P)

13. Other Agricultural Processing Societies:

13.1 State

13.2 Central

13.3 Primary

14. Co-operative Cold Storage (P)

15. Milk Supply Unions and Societies:

15.1 State

15.2 Unions

15.3 Societies

16. Ghee Unions and Societies (P).

16.1 Unions

16.2 Societies

17. Poultry Unions and Societies (P):

17.1 Unions

17.2 Societies.

18. Other Livestock Unions and Societies (P):

18.1 Unions

18.2 Societies

19. Other Livestock Societies (P)

20. Fisheries Societies:

20.1 State

20.2 Central

20.3 Primary

21. Irrigation Societies

22. Farming Societies

23. Consumers’ Co-operative Stores:

23.1 State Federations

23.2 Wholesale / District Stores

23.3 Primary

24. Working of Departmental Stores:

24.1 Run-by State Federations

24.2 Run-by Wholesale/District Stores

24.3 Primary

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25. Housing Societies:

25.1 State

25.2 Primary

26. Weavers’ Societies:

26.1 National

26.2 State

26.3 Central

26.4 Primary

27. Other Industrial Societies:

27.1 National

27.2 State

27.3 Central

27.4 Primary

28. Spinning Mills (All types)

29. Co-operative Industrial Estates

30. Labour Contract and ConstructionSocieties:

30.1 State

30.2 District (Unions)

30.3 Primary (Tribals)

30.4 Primary (non-tribal)

31. Forest Labourers’ Societies

31.1 State

31.2 Primary

32. Transport Societies (P):

32.1 Ex-Servicemen

32.2 Others

33. Electricity Co-operatives (P)

34. Other Non-Credit Societies (P):

34.1 Agricultural

34.2 Non-Agricultural

35. Women’s Co-operative Societies

36. Student’s Co-operative Societies

37. Multi-Unit Co-operative Societies (P)

Annex 3. 2: List of Institutions covered under the OFI sector

1. Central level non-Bank Financialinstitutions (i.e., Development Banks, UnitTrust, Term Lending Institutions and CreditRating Agencies):

� Industrial Development Bank of India

� Industrial Credit and InvestmentCorporation of India

� National Bank for Agriculture and RuralDevelopment

� Industrial Finance Corporation of India

� Industrial Investment Bank of India

� Unit Trust of India

� Housing Development Finance Corporation

� Export Import Bank of India

� Housing and Urban DevelopmentCorporation

� Rural Electrification Corporation

� Risk Capital and Technology FinanceCorporation Ltd.

� Infrastructure Leasing and Financial

Services Ltd.

� Small Industries Development Bank of India

� National Housing Bank

� Technology Development and InformationCompany of India

� Stock Holding Corporation of India Ltd.

� Credit Rating Information Services of India Ltd.

� Tourism Finance Corporation of India Ltd.

� Discount and Finance House of India Ltd.

� SBI Capital Markets Ltd.

2. State-Level Lending Institutions

� State Financial Corporations

� State Industrial Development/InvestmentCorporations (26 in number)

3. Insurance Sector

� Life Insurance Corporation of India

� General Insurance Corporation and its foursubsidiaries

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1. International Monetary Fund

2. International Bank for Reconstruction andDevelopment

3. International Development Association

4. International Financial Corporation

5. International Labour Organisation

6. International Civil Aviation Organisation

7. International TelecommunicationOrganisation

8. International Trade Organisation

9. Inter-government Maritime ConsultingOrganisation

10. Food & Agricultural Organisation of theUnited Nations

11. World Health Organisation

Annex 3.3: List of International Institutions

12. World Meteorological Organisation

13. Universal Postal Union

14. United Nations Educational, Social andCultural Organisation

15. United Nations Children’s Fund

16. United Nations Special Fund

17. United Nations Relief and Works Agency forPalestine Refugees,

18. Asian Clearing Union

19. International Fund for AgriculturalDevelopment

20. African Development Bank

21. Asian Development Bank

22. Other International Institutions

� Export Credit and Guarantee Corporationof India

� Deposit Insurance and Credit GuaranteeCorporation

4. Mutual Funds

� Tata Asset Management Ltd.

� Shriram Asset Management Ltd.

� IDBI Mutual Funds

� Taurus Mutual Funds

� BOB Mutual Funds

� Birla Mutual Funds

� Apple Asset Management Ltd.

� PNB Mutual Funds

� Alliance Capital Asset Management

� Indian Bank Mutual Funds

� BOI Mutual Funds

� ICICI Mutual Funds

� Canara Bank Mutual Funds

� Kothari Pioneer Mutual Funds

� Morgan Stanley Mutual Funds

� Reliance Capital Asset Management Ltd.

� HB Asset Management Co. Ltd.

� SBI Mutual Funds

� LIC Mutual Funds

5. Financial and Investment Companies

6. Non-Government Provident FundInstitutions

� RBI Employees

� Commercial Banks Employees

� Employees Provident Fund Scheme

� Assam Tea Plantation

� Seamen’s Provident Fund

� Life Insurance Corporation of India

� Coal Mines Employees Provident Fund

� Port Trusts

� IFCI & SFCs

� Dock Labour Boards

� Indian Airlines

� Air India

� Family Pension Fund

� Other Statutory Institutions /Corporations

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Company Finances Statistics

PART II – NON-FINANCIAL STATISTICS

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4.1. Introduction

The Reserve Bank of India has been regularlypublishing studies on the financial performanceof private corporate business sector for the pastfive decades. The source for measuring thefinancial performance of companies is theaudited annual accounts of companies. The workrelating to the analysis of balance sheets ofcompanies was initiated in the Bank as early asin 1949. The first study related to around 2500non-financial companies whose accounts wereclosed during 1947. Data on 20 selected itemswere captured in this study. The number ofitems included was increased to 51 in the nextstudy conducted in 1952, which related to 1000non-financial companies whose accounts wereclosed during 1948 and 1949. Both these studieswere exploratory in nature, aimed atunderstanding the presentation of corporatestatistics and the subtle differences, if any, inthe concepts and definitions adopted by thecompanies. Based on the experience gained fromthese studies, a system for the analysis andprocessing of financial statistics from the annualaccounts of selected companies was evolved andthe studies based on the same were taken upon a regular basis from 1953 onwards. The firstregular study for the years 1950 and 1951 waspublished in the RBI Bulletin in August 1954.

4.2. Measurement needs of the area

The main objective of the study is to buildcomprehensive corporate finance statistics witha view to capture the trends in income, value ofproduction, sales, profitability, saving,investment, borrowings, etc., for understandingthe broad structural features of the privatecorporate sector.

One of the features of company finance (CF)studies is the analysis of sources and uses offunds. These data give an insight into theinternal and external sources of funds of theprivate corporate sector; the adequacy of supportfrom financial intermediaries and the extent to

which corporate raise resources bypassingfinancial intermediaries. These data also givevaluable insight into the trends in capitalformation in the private corporate sector. Theanalysis of profit and loss accounts gives anindication on interest burden, profitability ofcorporates and give an idea of business climatein the country. These data, therefore, serve bothqualitative and quantitative inputs for the policyformulation.

As per the standing arrangement with theCentral Statistical Organization (CSO) and theRBI, the Department of Statistical Analysis andComputer Services (DESACS) of RBI compiles theestimates of saving and capital formation in theprivate corporate business sector based on thedata from CF studies and supplies the estimatesto CSO for inclusion in the National AccountsStatistics. The methodology of compiling theestimates of saving and capital formation in Indiahas been examined by two Expert Committees:the K.N. Raj Committee: “Capital Formation andSaving in India 1950-51 to 1979-80”, (Reportpublished in February 1982) and the Raja J.Chelliah Committee: “Report of the Expert Groupon Saving and Capital Formation”, December1996. Raj Committee (set up in 1981) on themethod of estimation of saving and investmentspecified the role of the RBI and the CSO inpreparing the estimates on saving andinvestment. While it recommended that the RBIshould prepare the estimates for the privatecorporate business sector and financial saving(except life insurance, provident and pensionfunds) of household sector.

The Expert Group on Saving and CapitalFormation (Chelliah Committee, set up in 1995)considered various alternative sources of data,viz., ASI data and data compiled by other privatebodies, for generating the estimates of saving andcapital formation of the private corporate sector.It was, however, noted that these sources of datado not provide complete or satisfactoryinformation to build up the required saving and

4. COMPANY FINANCES STATISTICS

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capital formation of the private corporatebusiness sector. Hence it recommendedcontinuation of preparation of the estimatesbased on the RBI studies.

In addition to the corporate saving andinvestment estimates at aggregate level, industry-wise saving and capital formation figures, dataon value added and its detailed components forselected industries and industry-wise inventorydata for preparation of Input-Output TransactionTable (IOTT) is also forwarded to CSO. The CSOuses data from CF studies on Financial andInvestment Companies to prepare estimates offinancial intermediation services indirectlymeasured (FISIM).

On the basis of the captured data, the DESACSis preparing the following regular annual studiesfor the publication in the RBI Bulletin.

a) Finances of Large public Limited Companies

b) Finances of Public Limited Companies

c) Finances of Private Limited Companies

d) Performance of Financial and InvestmentCompanies

e) Finances of Foreign direct investmentCompanies

A list of other adhoc publications is presentedin the Annex 4.1.

4.3. Concepts, Definitions and Classifications

The RBI studies present detailed data itemscovering all financial variables from ‘combinedbalance sheet’ and ‘combined income, value ofproduction and appropriation accounts’. Data onassets/liabilities, income, expenditure andappropriation accounts are culled out fromannual accounts and posted in self-balancingworksheets. The studies cover selected non-financial and financial companies relating thePrivate corporate business sector. The criteriaadopted for the selection of companies is thesize of their paid-up capital with objective ofhaving maximum coverage in terms of paid-upcapital and industry-wise representation ofcompanies. Companies in construction stage anddefunct companies are not included in the RBI

studies. The studies also exclude companies informative stage and those not operative for morethan six months during the year. In addition,companies functioning for non-profit motives,companies limited by guarantee andpromotional/developmental organizations areexcluded. The list of selected companies isrevised constantly with a view to improving thepaid-up capital coverage and the representativecharacter of the selected companies. Thesestudies include as many representativecompanies as possible from various industries.While presenting industry-wise results,companies are classified as per nationalindustrial classification (NIC), 1998. Sinceclassification of industries under NIC-1998 refersto activities, whereas, company finance studiesare based on products; the department adoptedcertain modifications at the 3-digit level to suitits requirements. In RBI classification, while thefirst two digits are taken from corresponding NICcode, the third digit is suitably adjusted torepresent specific industry/industry group basedon the main product. A company with more thanone line of business activity is classified underthe industry from which it derived more thanhalf of its sales.

In the process of analyzing the accounts, dataon assets/liabilities, income, expenditure andappropriation accounts are culled out fromannual accounts and posted in self-balancingworksheets. These are supplemented withinformation available in Directors’ report, noteson accounts, statutory disclosures, etc. Forpreparing the worksheet, the DESACS hasdeveloped suitable methodology so as tostandardize the accounts for comparabilitybetween companies and over time period. Allcompany finances studies cover data for threeconsecutive years, the current study year as wellas two immediate preceding years, so as to getcomparable growth rates and sources and usesof funds data. The definitional aspects of variousitems of assets, liabilities, income andexpenditure accounts are given in Annex 4.2.

4.4. Sources and Systems

The source of data for CF studies is the auditedannual accounts of companies. A company is

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required to present within six months of the dateof closing of accounts its balance sheet and profitand loss account at an annual general meeting(AGM) of the share holder members. Companiesprepare the annual accounts for theirshareholders in the manner prescribed in theSchedule VI of the Companies Act, 1956.

The DESACS maintains a database of companiesconsisting of information of about 32,000companies and corresponds with them forprocurement of balance sheets. Besides directcorrespondence with companies, DESACS alsogets balance sheets from Registrars of Companies(RoCs). Companies submit three copies of theirannual accounts to RoCs under whosejurisdiction they are falling. By an arrangementof RBI(DESACS) with the Ministry of CompanyAffairs (MCA), the RoCs provide one copy of thebalance sheet as required by RBI.

The National Statistical Commission (NSC)recognised the importance of RBI studies andrecommended various measures to strengthenthe data collection efforts of the Bank. TheCommission recommended that the Departmentof Company Affairs (Now Ministry of CompanyAffairs) should ensure that Annual Reports ofcompanies required by the Reserve Bank of India

(RBI) % whether listed, deemed or private limited– are made available to RBI so that furtherdetailed analysis can be conducted.

Annual accounts/reports of some companies areavailable in the Internet. The department usessuch reports whenever printed balance sheetsare not received through regular sources.

4.5. Ensuring Quality standards

The company finances studies present three-yeardata for the same set of companies at aggregate/industry level. In the case of companies, whicheither extended or shortened their accounting year,their income, expenditure and appropriationaccount figures are annualized. The balance sheetdata, however, have been retained as presented inthe annual accounts of the companies. Themethodology of standardization and aggregation ofcompany level data ensures that changes in thecomposition of selected companies do not affect theresults of the studies. While the derived financialratios are comparable over the years, forming time-series of ratios, the absolute numbers are notstrictly comparable due to changes in the samplesover the successive studies. However, if the analysisis based on common companies, the absolutefigures also become comparable.

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Annex 4.1

Annual Studies and Ad-hoc Publications

Annual Studies

1. Finances of Large Public Limited Companies

2. Finances of Public Limited Companies

3. Performance of Financial and Investment Companies

4. Finances of Private Limited Companies

5. Finances of Foreign Direct Investment Companies

Ad-hoc Publications (Other than in RBI Bulletin)

Name of the publication Month/Year ofPublication

I. Compendiums

(1) Financial Statistics of Joint Stock Companies in February 1967India 1950-51 to 1962-63

(2) Financial Statistics of Joint Stock Companies in August 1975India 1960-61 to 1970-71

(3) Financial Statistics of Joint Stock Companies in August 1977India 1970-71 to 1974-75

(4) Private Corporate Business Sector in India – November 2000Selected Financial Statistics from 1950-51 to 1997-98(All-Industries) (Available on CD-ROM also)

(5) Selected Financial Statistics – Public Limited Companies September 20011974-75 to 1999-2000 (Selected Industries) (Available on CD-ROM also)

II. Census Studies

(1) Census of Public Limited Companies in India 1971-72 January 1980

(2) Census of Public Limited Companies in India 1976-77 October 1983

(3) Public Limited Companies in India 1980-82- A Profile December 1986

III. Financial Ratios

(1) Selected Financial and other Ratios Private Corporate Sector October 19781970-71 to 1975-76

(2) Selected Financial and other Ratios Private Corporate Sector November 19821975-76 to1978-79

(3) (a) Selected Financial and other Ratios Public Limited Companies December 19901980-81to 1987-88 All Industries (Vol. I)

(b) Selected Financial and other Ratios Public Limited Companies1980-81to 1987-88 Selected Industries (Vol. II) December 1990

(4) Selected Financial and other Ratios Private Limited Companies May 19921980-81 to1987-88

(5) (a) Selected Financial and other Ratios Public Limited Companies October 19941988-89 to 1990-91 (Part I)

(b) Selected Financial and other Ratios Private Limited Companies October 19941988-89 to 1990-91 (Part II)

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� The growth rates of all the items and dataon sources and uses of funds are adjustedfor changes due to amalgamation ofcompanies. These are also adjusted forrevaluation, etc., wherever necessary.

� Due to rounding off of figures, theconstituent items may not add up to thetotals.

� Sales are net of ‘rebates and discounts’ and‘excise duty and cess’.

� Manufacturing expenses comprise (a) rawmaterials, components, etc. consumed, (b)stores and spares consumed, (c) power andfuel and (d) other manufacturing expenses.

� Raw materials, components, etc., consumedincludes purchases of traded goods in thecase of trading companies and consumptionof stores and provisions for hotels,restaurants and eating houses.

� Other manufacturing expenses includeexpenses like construction expenses ofconstruction companies, operating expensesof shipping companies, etc.

� Remuneration to employees comprises (a)salaries, wages and bonus, (b) providentfund and (c) employees’ welfare expenses.

� Non-operating surplus / deficit comprises(a) profit / loss on account of (i) sale offixed assets, investments, etc., and (ii)revaluation / devaluation of foreigncurrencies, (b) provisions no longer requiredwritten back, (c) insurance claims realisedand (d) income or expenditure relating tothe previous years and such other items ofnon-current nature.

� Gross profits are net of depreciationprovision but before interest payments.

� Gross saving is measured as the sum ofretained profits and depreciation provision.

� Gross value added comprises (a) net valueadded and (b) depreciation provision.

Annex 4.2

� Net value added comprises (a) salaries, wagesand bonus, (b) provident fund, (c) employees’welfare expenses, (d) managerialremuneration, (e) rent paid net of rentreceived, (f) interest paid net of interestreceived, (g) tax provision, (h) dividends paidnet of dividends received and (i) retainedprofits net of non-operating surplus / deficit.

� Debt comprises (a) all borrowings from Govt.and semi-Govt. bodies, financial institutionsother than banks, and from foreigninstitutional agencies, (b) borrowings frombanks against mortgages and other long termsecurities, (c) borrowings from companies andothers against mortgages and other long termsecurities and (d) debentures, deferredpayment liabilities and public deposits.

� Equity or Net worth comprises (a) paid-upcapital, (b) forfeited shares and (c) allreserves and surplus.

� Current assets comprise (a) inventories, (b)loans and advances and other debtorbalances, (c) book value of quotedinvestments, (d) cash and bank balancesand (e) advance of income tax in excess oftax provision.

� Current liabilities comprise (a) short termborrowings from banks, (b) unsecured loansand other short term borrowings fromcompanies and others, (c) trade dues andother current liabilities and (d) tax provisionin excess of advance of income-tax andother current provisions.

� Quick assets comprise (a) sundry debtors,(b) book value of quoted investments and(c) cash and bank balances.

� Capital reserves include profits on sale ofinvestments and fixed assets.

� Other reserves include profits retained inthe form of various specific reserves andprofit / loss carried to balance sheet.

� Debentures include privately placeddebentures with financial institutions.

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This chapter covers the concepts and definitionsrelating to India’s external sector statisticscovering balance of payments, external debt,foreign investment inflows, NRI deposits,international investments position, foreignexchange reserves, etc. The data on each of thesecomponents are compiled following theinternational best practices. The detailed aspectsof each of the components are outlined below.

5.1. BALANCE OF PAYMENTS

In India’s balance of payments (BoP),transactions are recorded in accordance with theguidelines given in the fifth edition of IMF’sBalance of Payments Manual (1993), with minormodifications to adapt to the specifics of theIndian situation. The Manual defines BoP as astatistical statement that systematicallysummarises, for a specific time period, theeconomic transactions of an economy with therest of the world. Transactions between residentsand non-residents consist of those involvinggoods, services, and income; involving financialclaims on and liabilities to the rest of the world;and those classified as transfers, involvingoffsetting entries to balance one-sidedtransactions. The data are received from thebanking system as part of the Foreign ExchangeManagement Act (FEMA), 1999. The data arereceived by the Reserve Bank of India mainlyfrom the banking system (authorized dealers) aspart of the Foreign Exchange Management Act(FEMA), 1999.

The basic structure of the Balance of Payments(BOP) of India consists of:

(i) Current account: exports and imports ofgoods, services, income (both investmentincome and compensation of employees) andcurrent transfers;

(ii) Capital account: assets and liabilities coveringdirect investment, portfolio investment, loans,banking capital and other capital;

(iii) Statistical discrepancy;

(iv) International reserves and IMF transactions.

5. EXTERNAL SECTOR STATISTICS

5.1.1. Current Account

5.1.1.1. Merchandise Trade

Merchandise credit relates to export of goodswhile merchandise debit represent import ofgoods. These are mainly based on reporting fromthe authorized dealers (ADs) supplemented bythe information from other sources such asDGCI&S, USAID, Government of India. The item“Non-monetary Gold Movement” has beenexcluded from Invisibles in conformity with theIMF Manual on BOP (4th edition) from May 1993onwards; these entries have been included undermerchandise. Data on gold and silver broughtin by the Indians returning from abroad havebeen included under imports payments withcontra entry under Private Transfer Receiptssince 1992-93.

5.1.1.2. Services

Services receipts and payments are compiledbased on the information received from ADssupplemented with other sources such as AirIndia, embassies, NASSCOM, Full-fledged moneychangers, Government of India.

5.1.1.2.1. Travel

Travel’ represents all expenditure by foreigntourists in India on the receipts side and allexpenditure by Indian tourists abroad onpayments side. Travel receipts largely depend onthe arrival of foreign tourists in India during agiven time period.

5.1.1.2.2. Transportation

‘Transportation’ records receipts and paymentson account of the carriage of goods and naturalpersons as well as other distributive services (likeport charges, bunker fuel, stevedoring, cabotage,warehousing, etc.) linked to merchandise trade.

5.1.1.2.3. Insurance

‘Insurance receipts’ consist of insurance onexports, premium on life and non-life policiesand reinsurance premium from foreign insurance

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External Sector Statistics

companies. Insurance on exports is directlyrelated to total exports from India.

5.1.1.2.4. Government not includedelsewhere (GNIE)

‘Government not included elsewhere (GNIE)’receipts represent inward remittances towardsmaintenance of foreign embassies, diplomaticmissions and offices of international/regionalinstitutions in India, while GNIE payments recordthe remittances on account of maintenance ofIndian embassies and diplomatic missionsabroad and remittances by foreign embassies ontheir account.

5.1.1.2.5. Miscellaneous

‘Miscellaneous services’ comprise of a host ofbusiness services, viz., communication,construction, financial, software and news agencyservices, royalties, copyright and license fees,management services and others. Of late, dataon software services – receipts and payments,are presented separately.

5.1.1.3. Transfers (Official, Private)

Transfers represent one-sided transactions, i.e.,transactions that do not have any quid pro quo,such as grants, gifts, and migrants’ transfers byway of remittances for family maintenance,repatriation of savings and transfer of financialand real resources linked to change in residentstatus of migrants. Official transfer receiptsinclude grants, donations and other assistancereceived by the Government from bilateral andmultilateral institutions. Similar transfers byIndian Government to other countries arerecorded under official transfer payments.

5.1.1.4. Income

Transactions are in the form of interest, dividend,profit and others for servicing of capitaltransactions. Investment income receiptscomprise interest received on loans to non-residents, dividend/profit received by Indians onforeign investment, reinvested earnings of IndianFDI companies abroad, interest received ondebentures, floating rate notes (FRNs),Commercial Papers (CPs), fixed deposits and

funds held abroad by ADs out of foreign currencyloans/export proceeds, payment of taxes by non-residents/refunds of taxes by foreigngovernments, interest/discount earnings on RBIinvestment etc. Investment income paymentscomprise payment of interest on non-residentdeposits, payment of interest on loans from non-residents, payment of dividend/profit to non-resident share holders, reinvested earnings of theFDI companies, payment of interest ondebentures, FRNs, CPs, fixed deposits,Government securities, charges on SpecialDrawing Rights (SDRs) etc.

In accordance with the IMF’s Balance ofPayments Manual (5th edition), ‘compensationof employees’ has been shown under head,“income” with effect from 1997-98; earlier,‘compensation of employees’ was recorded underthe head “Services – miscellaneous”.

5.1.2. Capital Account

The data on capital account are compiled on thebasis of various returns filed by the entitiesengaged in capital account transactions to theReserve Bank of India or Government of India.These include reporting on foreign directinvestment, foreign institutional investment/ADR/GDR, external commercial borrowing(ECBs)/foreign currency convertible bonds(FCCBs), trade credit, NRI deposits and otherbanking liabilities/assets. The data on externalassistance are obtained from the Government ofIndia.

5.1.2.1. Foreign Investment

Foreign investment has two components, namely,foreign direct investment and portfolioinvestment. Foreign direct investment (FDI) toand by India up to 1999-2000 comprise mainlyequity capital. In line with international bestpractices, the coverage of FDI has been expandedsince 2000-01 to include, besides equity capital.reinvested earnings (retained earnings of FDIcompanies) and ‘other direct capital’ (inter-corporate debt transactions between relatedentities). Data on equity capital include equityof unincorporated entities (mainly foreign bankbranches in India and Indian bank branches

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operating abroad) besides equity of incorporatedbodies. Data on reinvested earnings for the latestyear (2002-03) are estimated as average of theprevious two years as these data are availablewith a time lag of one year. In view of the aboverevision, FDI data are not comparable withsimilar data for the previous years. In terms ofstandard practice of BoP compilation, the aboverevision of FDI data would not affect India’soverall BoP position as the accretion to theforeign exchange reserves would not undergo anychange. The composition of BoP, however, wouldundergo changes. These changes relate toinvestment income, external commercialborrowings and errors and omissions. In case ofreinvested earnings, there would be a contraentry (debit) of equal magnitude underinvestment income in the current account. ‘OtherCapital’ reported as part of FDI inflow has beencarved out from the figure reported underexternal commercial borrowings by the sameamount. ‘Other Capital’ by Indian companiesabroad and equity capital of unincorporatedentities have been adjusted against the errorsand omissions for 2000-01 and 2001-02.

5.1.2.2. Portfolio Investment

Portfolio investments mainly include FIIs’investment, funds raised through GDRs/ADRsby Indian companies and through offshore funds.Data on investment abroad, hitherto reported,have been split into equity capital and portfolioinvestment since 2000-01.

5.1.2.3. External Assistance

External assistance by India denotes aidextended by India to other foreign Governmentsunder various agreements and repayment ofsuch loans. External Assistance to India denotesmultilateral and bilateral loans received underthe agreements between Government of India andother Governments/International institutions andrepayments of such loans by India, except loanrepayment to erstwhile “Rupee area” countriesthat are covered under the Rupee Debt Service.

5.1.2.4. Commercial Borrowings

Commercial borrowings cover all medium/longterm loans. Commercial Borrowings by India

denote loans extended by the Export ImportBank of India (EXIM bank) to various countriesand repayment of such loans. CommercialBorrowings - to India denote drawls/ repaymentof loans including buyers credit, suppliers credit,floating rate notes (FRNs), commercial paper (CP),bonds, foreign currency convertible bonds(FCCBs) issued abroad by the Indian corporate,etc. It also includes India Development Bonds(IDBs), Resurgent India Bonds (RIBs), IndiaMillennium Deposits (IMDs).

5.1.2.5. Short-Term Loans to India

It is defined as the drawls in respect of loans,utilized and repayments with a maturity of lessthan one year.

5.1.2.6. Banking Capital

It comprises three components: a) foreign assetsof commercial banks (ADs), b) foreign liabilitiesof commercial banks (ADs), and c) others.‘Foreign assets’ of commercial banks consist of(i) foreign currency holdings, and (ii) rupeeoverdrafts to non-resident banks. ‘Foreignliabilities’ of commercial banks consists of (i)Non-resident deposits, which comprises receiptand redemption of various non-resident depositschemes, and (ii) liabilities other than non-resident deposits which comprises rupee andforeign currency liabilities to non-resident banksand official and semi-official institutions. ‘Others’under banking capital include movement inbalances of foreign central banks andinternational institutions like IBRD, IDA, ADB,IFC, IFAD, etc., maintained with RBI as well asmovement in balances held abroad by theembassies of India in London and Tokyo.

5.1.2.7. Rupee Debt Service

Rupee debt service includes principal repaymentson account of civilian and non-civilian debt inrespect of Rupee Payment Area (RPA) andinterest payment thereof.

5.1.2.8. Other Capital

Other capital comprises mainly the leads andlags in export receipts. Besides this, other itemsincluded are funds held abroad, India’s

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subscription to international institutions, quotapayments to IMF, remittances towards recoupingthe losses of branches/subsidiaries and residualitem of other capital transaction not includedelsewhere.

5.1.3. Movement in Reserves

Movement in reserves comprises changes in theforeign currency assets held by the RBI and SDRbalances held by the Government of India. Theseare recorded after excluding changes on accountof valuation. Valuation changes arise becauseforeign currency assets are expressed in USdollar terms and they include the effect ofappreciation/depreciation of non-US currencies(such as Euro, Sterling, Yen) held in reserves.

In accordance with the provisions of IMF’sBalance of Payments Manual (5th Edition), goldpurchased from the Government of India by theRBI has been excluded from the BOP statistics.Data from the earlier years have, therefore, beenamended by making suitable adjustments in“Other Capital Receipts” and “Foreign ExchangeReserves”. Similarly, item “SDR Allocation” hasbeen deleted from the table.

5.1.4. Exchange Rates

Foreign currency transactions have beenconverted into rupees at the par/central ratesup to June 1972 and on the basis of average ofthe Bank’s spot buying and selling rates forsterling and the monthly averages of cross ratesof non-sterling currencies based on Londonmarket thereafter. Effective March 1993,conversion is made by crossing average spotbuying and selling rate for US dollar in theforeign exchange market and the monthlyaverages of cross rates of non-dollar currenciesbased on the London market.

5.1.5. Data Sources

Data on BoP are primarily compiled on the basisof International Transaction Reporting System(ITRS) in the form of fortnightly R-Returns filedby ADs/banks dealing in forex transactions. Inaccordance with the Foreign ExchangeManagement Act (FEMA), 1999, all foreignexchange transactions must be channeled

through banking system and the banks thatundertake foreign exchange transactions mustsubmit various periodical returns and supportingdocuments prescribed under the FEMA to RBI.

The above information is further supplementedby information available from the DirectorateGeneral of Commercial Intelligence and Statistics(DGCI&S), various embassies/consulatesincluding Indian embassies/consulates abroad,various ministries/government agencies/departmental undertakings, USAID, NationalAssociation of Software Service Companies(NASSCOM), Air India, financial institutions andcommercial banks (independent of reportingunder ITRS), corporate sector and the RBI’s ownrecords.

5.1.6. Data Dissemination

At present, BoP statistics are published in twoformats, viz., standard presentation with broadheads and detailed presentation with break-upof broad heads. The standard presentation withbroad heads is compiled in accordance with themethodology set out in the IMF Balance ofPayments Manual, 5th edition (BPM5) and ispublished every quarter with a lag of threemonths as per IMF’s Special Data DisseminationStandards (SDDS) requirements. Thedisaggregated data on invisibles are finalised andpublished once the firm data on componentsbecome available. Invisibles are broadly classifiedunder three heads, viz., services, transfers andincome. While services, comprise travel,transportation, insurance, government notincluded elsewhere (GNIE) and miscellaneous (i.e.other services); transfers constitute privatetransfers and official transfers and incomeincludes investment income and compensationof employees.

5.1.7. Revisions Policy for India’s Balance ofPayments Data

India’s balance of payments statistics arepublished as ‘preliminary’, ‘partially revised’ and‘revised’ data. Preliminary data are quarterly andare released with a lag of three months from thereference date (i.e., data for the quarter endingMarch 2004 are available at the end of June

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2004). Preliminary data are subjected to somerevisions during the year and partially reviseddata are released with lags of six months, ninemonths and twelve months from the referencedate, alongside preliminary data for the relevantquarter(s). Partial revisions in the annual dataare carried out with a lag of eighteen monthsfrom the reference date. Thereafter, the data are‘frozen’ and final revisions are incorporated inthe revised data, which are released within a lagof twenty-four months from the reference date.Extraordinary revisions may be undertaken withinthis cycle in the event of methodological changesin respect of data collection and compilationprocedures and/or significant changes indicatedby data sources that cause structural shifts inthe data series. These extraordinary revisions aredocumented at the time of release. Preliminary,partially revised and revised data are clearlyidentified in the text and tables.

5.2. EXTERNAL DEBT

The definition of gross external debt adopted byIndia is based on the definition provided in 1988by the International Working Group on ExternalDebt Statistics (IWGEDS), which was set upjointly by the Bank for International Settlements(BIS), the International Monetary Fund (IMF), theOrganisation for Economic Cooperation andDevelopment (OECD) and the World Bank. Thecore definition of external debt given by theIWGEDS is “gross external debt is the amount,at any given time, of disbursed and outstandingcontractual liabilities of residents of a countryto non-residents to repay principal, with orwithout interest, or to pay interest, with orwithout principal”.

The coverage of data is broadly consistent withthe recommendations made in IMF’s “ExternalDebt Statistics – Guide for Compilers and Users”,1993. The external debt classificationdistinguishes between type of debtor/creditor, bymaturity, i.e., long term and short term, by typeof transactions, i.e., deposit or trade related andby element of concessionality.

5.2.1. Scope of the data

The gross external debt of the country isclassified under eight categories: (i) multilateral,

(ii) bilateral, (iii) IMF, (iv) trade credits, (v)commercial borrowings, (vi) NRI deposits, (vii)rupee debt and (viii) short-term debt of maturityup to one year. In contrast to the liabilities sideof the international investment position (IIP), theexternal debt data do not include any financialliabilities arising from foreign direct investment(except loans obtained by FDI enterprises inIndia from their parent company abroad) andequity component of foreign portfolio investment.

5.2.2. Accounting Conventions

External debt data are compiled anddisseminated on original maturity basis. Externaldebt is compiled and presented both in terms ofUS dollar and Indian rupees. The external debtfigures are first compiled in terms of Indianrupees and then converted into US dollar at thespot exchange rate on the reference date.

5.2.3. Nature of the Basic Data Sources

At present various sources are used for obtaininginformation on various components of theexternal debt. The office of the Controller of Aid,Accounts and Audit Division, Ministry of Finance(MoF), Government of India (GoI) collectsinformation on (i) multilateral and bilateral debt,excluding that part of multilateral/bilateral non-conessional debt to non-government entities forwhich approval needs to be sought under theECB route; (ii) bilateral component of tradecredit.

The External Debt Management Unit (EDMU) ofthe Department of Economic Affairs, MoF, GoI,collects data on rupee debt and export creditcomponent for defence purposes. Securities andExchange Board of India (SEBI) is the sourcefor data on FII investment in debt instruments.Information on all other components of debt, viz.,commercial borrowings, NRI deposits and tradecredits (both long and short term) is collectedby the Reserve Bank of India.

5.2.4. Compilation Practices

India’s external debt data are disseminatedunder two broad heads namely, long-term andshort-term. Long term debt is classified intomultilateral, bilateral, IMF, export credit,

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commercial borrowings, rupee debt and NRIdeposits. Short-term debt comprises NRIdeposits and trade related credits. The furtherdisaggregation of long-term and short-term debtis based on creditor source and the status ofborrower.

� Loans raised by India under externalassistance programme or OfficialDevelopment Assistance (ODA) are coveredfor the most part under multilateral andbilateral classification. Under multilateral,the following creditor sources have beenidentified: IDA, IBRD, ADB, EEC(SAC),OPEC, ISO, NIB, and IFC(W). Loans raisedfrom all the above international bodiesexcept IFC(W) are included undermultilateral. The latter is treated as a partof commercial borrowings. Multilateralgroup comprises the loans extended by theabove international institutions to theGovernment under ODA as well as loans tonon-Government entities including those atmarket determined interest rates(commercial borrowings).

� Bilateral group represents loans receivedfrom bilateral sources. Certain bilateralcredits to Government of India contain anexport credit component, for exampleFrench and German credits as well as Swissmixed credits, which is not treated asbilateral but as a part of export credit.Loans raised by non-Government entitiesincluding those at market related interestrates (commercial borrowings) from bilateralsources, for example EXIM Japan, EXIMUSA and KFW Germany, are covered underbilateral category.

� The multilateral and bilateral loans areclassified into Government and Non-Government borrowings. Governmentborrowings are those which pass throughCentral Government’s budget. Non-Government borrowings include all loansraised by the non-government bodies withor without Government guarantee. Government and Non-Government creditsare further disaggregated into concessionaland non-concessional. Concessional loans

are those loans under ODA, which carrygrant element of more than 25 per cent. Rest are all non-concessional.

� “IMF” classification represents use of Fundcredits. “Export credits” essentially includelong-term trade credits. ”Buyers’ credits’are export credits raised throughcommercial banks with insurance coverfrom export credit agency of the donorcountry. “Suppliers’ credits’ are creditsextended by the suppliers with or withoutinsurance cover by export credit agencies. “Export credit component of bilateral loans’are export credits routed throughcommercial banks and are part of thepackage of bilateral assistance.

� “Commercial borrowings” compriseborrowings from international capitalmarkets on commercial terms. “Commercial banks loans’ refer toborrowings by Indian entities frominternational banks and other financialleasing and lending by overseas branchesof Indian commercial banks to Indianresidents. ‘Securitised Borrowings’ includefunds raised through the issue of securitisedinstruments like bonds (including forexample India Development Bonds andResurgent India Bonds), Floating RateNotes, Euro-Commercial Paper, NoteIssuance Facility, etc., and Non-convertible/convertible debentures. India Millenniumdeposits (IMDs) also figure here. FIIinvestment in Government securities istreated as part of securitised borrowings.“Loans/securitised borrowings withmultilateral/bilateral guarantee and IFC(W)”covers borrowings of Indian residents frominternational capital market with aguarantee from multilateral/bilateralagencies.

� NRI deposits consist of deposits underForeign Currency Non-resident (Banks) (FCNR)(B) and Non-resident (External)Rupee Account (NR(E)RA). Back datainclude Foreign Currency Non-residentAccount (FCNRA) which was withdrawn witheffect from August 1994.

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� Rupee debt covers civilian and non-civilian(defence) rupee debt owed to Russia whichare payable through exports.

� Short-term debt represents all borrowingsincluding NRI deposits with maturity of sixmonths to one-year.

5.2.5. Other Aspects

The Reserve Bank of India compiles andpublishes quarterly data on India’s external debtfor quarters ending March and June and theMinistry of Finance, Government of India releasesexternal debt data for quarters ending Septemberand December. The data are not seasonallyadjusted. The data are preliminary when firstreleased and are revised in about one year, bywhich time they become final.

5.3. FOREIGN INVESTMENT INFLOWS

Foreign investment inflows can be broadlycategorised as Foreign Direct Investment (FDI)and Foreign Portfolio Investment (FPI). FDI is theprocess whereby residents of one country (thehome country) acquire ownership of assets forthe purpose of controlling the production,distribution and other activities of a firm inanother country (the host country). Accordingto International Monetary Fund (IMF) definitioncontained in the Balance of Payments Manual,Fifth Edition (BPM-5), FDI has three components,viz., equity capital, reinvested earnings and otherdirect capital. India reports FDI inflows inaccordance with the IMF definition, whichinclude reinvested earnings and other directcapital flows, besides equity capital. PortfolioInvestment includes investment in equitysecurities and debt securities in the form ofbonds and notes, money market instruments andother instruments such as American DepositoryReceipts (ADRs)/Global Depository receipts thatusually denotes ownership of equity.


Following the IMF practice and in line with othercountry practices, foreign investment data arepublished under two broad heads: Foreign DirectInvestment (FDI) and Foreign Portfolio Investment(FPI). FDI data for India is published under the

following three broad heads, viz., equity capital,reinvested earnings and intra-company loans. FPIincludes portfolio flows through issuance ofAmerican depository receipts (ADRs)/globaldepository receipts (GDRs) and investment byForeign Institutional Investors (FIIs).


Foreign Investment data is compiled andpresented in terms of US dollar.


The basic source for obtaining information onvarious components of foreign investment is theReserve Bank of India.


In India, foreign investment data including FDI andFPI are compiled on a monthly basis by the RBI,using an international transactions reportingsystem (ITRS) as the principal source ofinformation. Following the methodology prescribedin BPM5, data on fresh inflows of foreign directinvestment are being captured through reportingof these transactions by the companies who receivethese funds. The companies who receive the foreigninvestment report send these receipts data with fulldetails to the Reserve Bank, which are thenconsolidated and used for compilation of directinvestment data. Amount raised by the corporatesthrough issuances of ADRs/GDRs are reported tothe Reserve Bank.

The Reserve Bank also separately obtains fromthe custodians, on a weekly basis, the details ofactual inflows/outflows into the accounts of theFIIs. Data on reinvested earnings and othercapital is captured through annual surveys onFDI companies. These different components arethen, finally compiled and consolidated to obtainthe data on aggregate foreign investment in India.


RBI publishes foreign investment data on amonthly basis in the RBI Bulletin, whichprovides component-wise details of directinvestment and portfolio investment. Directinvestment comprises of inflows through (i)

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Equity via Government (SIA/FIPB) route, RBIautomatic route, NRI, acquisition of shares andequity capital of unincorporated bodies, (ii)Reinvested Earnings and (iii) Other capital.Portfolio investment covers: (i) GDRs / ADRs (ii)FIIs, and (iii) offshore funds and others.

5.4. NON RESIDENT DEPOSITS

Non resident Indians (NRIs) are allowed to openand maintain bank account in India underspecial deposit schemes – both rupeedenominated and foreign currency denominated.Such deposits are termed NRI deposits. For thepurpose of opening and maintaining NRIdeposits, Non resident Indian and Overseascorporate bodies are defined as follows:

� An Indian Citizen residing outside India anda Foreign Citizen of Indian origin residingoutside India for employment/ carrying onbusiness or vocation outside India orstaying abroad under circumstancesindicating an intention for an uncertainduration of stay abroad are defined as Non-Resident Indians. Persons posted in UnitedNations organizations and officials deputedabroad by Central/State Governments andpublic sector undertakings on temporaryassignments are also treated as non-residents.

� Foreign citizens of Indian origin are treatedat par with NRIs for certain facilities underbank deposits and investments in India. ‘Aperson of Indian origin’ means an individual(not being a citizen of Pakistan orBangladesh or Sri Lanka), who at any time,held an Indian passport; or who or eitherof whose parents or whose grandparentswere citizens of India by virtue of theConstitution of India or the Citizenship Act,1955 (57 of 1955).


NRI deposits include deposits under ForeignCurrency Non-resident (Banks) (FCNR)(B) andNon-resident (External) Rupee Account(NR(E)RA). Back data include NR(NR)RD whichwas withdrawn in 2002.

FCNR(B) deposits are designated in foreigncurrency. The deposits can be made by NRIs.They are accepted in Pound Sterling, US Dollar,EURO, Japanese yen, Australian dollar andCanadian dollar. FCNR(B) deposits are acceptedfor the tenure of one year and above but lessthan two years, two years and above but lessthan three years and three years only.

NR(E)RA and NR(NR)RD, on the other hand, area rupee denominated deposit schemes, where inNRIs can park their funds in both term depositsas well savings accounts.


FCNR (B) deposits are compiled and disseminatedin US dollar. For FCNR (B) deposits, conversioninto a numeraire currency (US dollar) is done onthe basis of average monthly exchange rate. NREand NRNR deposits data are first compiled interms of Indian rupees and then converted intoUS dollar. The stock data at the end of eachmonth is calculated on the basis of end-periodexchange rate for the respective month. Forcompilation of the monthly net flow figures, theaverage rupee-US dollar exchange rate for themonth is used for conversion.


The basic source for obtaining information onvarious components of NRI deposits is theReserve Bank of India.


At present, the monthly outstanding balancesunder the existing Non-Resident Deposit schemesare compiled on the basis of fortnightly statementon external liabilities received by Reserve Bankof India (RBI) under Section 42(2) of the RBIAct. These data are supplemented by informationreceived in the form of monthly statementssubmitted by ADs to the Reserve Bank forcalculating the maturity structure and comparingthe balances under various deposits.


The figures on NRI deposits are published inthe Reserve Bank of India Bulletin on a monthly

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basis. It is also published every quarter in thetable on Balance of Payments of the Bulletin.

5.5. INTERNATIONAL INVESTMENTPOSITION OF INDIA

The International Investment Position (InIP),compiled as at the end of a specific period suchas quarter-end or year-end, is the balance sheetof the stock of external financial assets andliabilities of a country. The net InIP (the stock ofexternal assets less the stock of external liabilities)shows the difference between what an economyowns in relation to what it owes. Reflecting theincreased world interest in levels of foreigninvestment, InIP has been included under SpecialData Dissemination Standard (SDDS) of the IMFto provide key information for assessing acountry’s economic relations with the rest of theworld. The conceptual framework for the InIPwas introduced in the fifth edition of theInternational Monetary Fund’s (IMF’s) Balance ofPayments Manual (BPM5) in 1993. The positionat the end of a specific period reflects financialtransactions, valuation changes, and otheradjustments that occurred during the period andaffected the level of assets and/or liabilities.

RBI disseminates InIP data annually as per theformat prescribed under the SDDS by theInternational Monetary Fund (IMF). This manualpresents the detail compilation procedurefollowed to compile the InIP of India.

5.5.1. Concept

The underlying concept of Balance of Payments(BoP) and InIP are same [ref. BPM5 (1993), BoPCompilation Guide (1995), BoP Text Book (1996)].Transactions between residents and non-residentsof an economy are shown in the BoP under threeaccounts, viz., current account, capital accountand financial account. The internationalinvestment position measures the economy’s stockof external financial assets and liabilities; the BOPfinancial account measures transactions duringthe period in these assets and liabilities.

5.5.2. InIP Components: Definition andClassification

Foreign Assets and Foreign Liabilities

International investments made by a country innon-resident entities constitute foreign assets

whereas international investments received by acountry from non-resident entities form itsforeign liabilities. These assets/liabilities areprimarily financial assets and financial liabilities.Assets are divided into direct investment,portfolio investment, financial derivative, otherinvestment and reserve assets. Liabilities aredivided the same way except for reserve assets,i.e., direct investment, portfolio investment,financial derivative and other investment.

Direct Investment and Portfolio Investment

As per the IMF manual, internationalinvestments are broadly classified under fivecategories viz. direct investment, portfolioinvestment, financial derivatives, otherinvestment and reserve assets. Direct investmentis the category of international investment thatreflects the objective of a resident entity in oneeconomy obtaining a lasting interest in anenterprise resident in another economy. Directinvestment includes equity capital, reinvestedearnings, and other capital (inter company debt).Claims on and liabilities to affiliated enterprisesare shown separately. The “lasting interest”aspect is translated in terms of holding ofordinary share or voting power, a threshold often percent is indicated by IMF. Otherwise theinvestment is classified as portfolio investmentin equity.

The manual states that portfolio investmentincludes equity securities and debt securities inthe form of bonds and notes, and money marketinstruments. Excluded are any of theaforementioned instruments included in thecategories of direct investment and reserveassets. Portfolio investment under eachinstrument then is sub-classified by institutionalresident sectors viz. Monetary authorities,General government, Banks and Other sectors.

Financial Derivatives

Financial derivatives are financial instrumentsthat are linked to another specific financialinstrument, indicator, or commodity and throughwhich specific financial risks can be traded infinancial markets in their own right. Thederivatives are classified by the four institutional

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resident sectors, viz., Monetary authorities,General government, Banks and Other sectors.All financial derivatives are included here exceptthose reported under reserve assets.

Other investment

The fourth category of investments, viz., ‘Otherinvestment’ includes investments other than inequities and securities such as Trade credits,loans, currency and deposits and other assets/liabilities. (such as capital subscriptions tointernational, non-monetary organizations andmiscellaneous accounts receivable and payable).Other investment are also classified by sectorand lastly by original maturity (long term andshort term).

A detail discussion on data sources for the aboveitems are available in InIP Guide (2002)published by the IMF.

Reserve Assets

Reserve assets are foreign financial assetsavailable to, and controlled by, the monetaryauthorities or financing or regulating paymentsimbalances or for other purposes.

5.5.3. Dissemination of InIP of India

India has been disseminating data pertaining toInIP since 1951. The first study on India’s InIPentitled “Census of India’s Foreign Liabilities andAssets (as on June 30, 1948)” was published bythe RBI in 1951 [RBI(1951)]. However, withIndia’s subscription to SDDS, India committedto disseminate InIP as per the SDDS formatprescribed by IMF. Currently annual data as onMarch are released by September of the samecalendar year through RBI website . Data arereleased as per the prescribed format underSDDS and are available from end March 1997.

5.5.4. Compilation Methodology/Procedure

The format of the InIP as prescribed by the IMF

is presented in the Annex 5.1. At present twomethods are followed to compile the data asstated below:

� In the case of direct investment (DI) data,BoP data are added to the previous yearstock value. Necessary exchange ratechanges are taken into account in the finalcompilation. In the case of DI assets, dataare first compiled based on US Dollars(USD) values and then converted to Indianrupee values. In the case of DI liabilities,data are first compiled in Indian rupee (INR)and then converted to USD. Exchange rateof USD as on end-March vis-à-vis INR ofthe reference year is used for conversion.Data as on end-March 1997 that wascompiled through a census and publishedin 2000 provide the base value [RBI(2000)].

� Data pertaining to Banks, Government andMonetary authority are compiled based onpublished sources or collected from thecorresponding agencies. If the publisheddata of the stock values are available inUSD as well as in INR (e.g. reserves,external debt, etc.), then the publishedinformation is used for InIP. If the data areavailable in either currency only, end-Marchexchange rate of USD vis-à-vis INR of thereference year is used for necessaryconversion.

� Data pertaining to corporate sector (otherthan direct investment and portfolioinvestment) are compiled based on survey,viz., survey on foreign liabilities and assetson non-financial companies, mutual funds,insurance companies.

5.5.5. Limitation of the current methodology

Changes in InIP over a period occur due to fourreasons, viz., financial transactions, price andexchange rate changes, and other adjustmentsas shown in Table 5.1.

Table 5.1: Changes in InIP

Changes

Position at the Financial Price Exchange Other Position atbeginning of Transactions Changes Rate Adjustments the end ofthe period Changes the period

232


At present a few items, viz., reserves, non-resident deposits, are compiled incorporating allthe changes mentioned above. However, in thecase of all other items, changes due to financialtransactions and exchange rate only are taken

into account as information on price changesand other adjustments are not readily available.

Following the above, the sources of data ofvarious components and compilation proceduresare given in Table 5.2.

Table 5.2. Compilation of Guidelines for International Investment Position

Flow Stocks Source

A. Assets

1. Direct Investment Abroad

1.1 Equity Capital and Reinvested BoP Table: 43 Net flow is added to base data on RBI Bulletin forEarnings (in USD) - stock, which are available in the Flow data

Latest article titled ‘Census of India’s (Statements on BoP(as relevant) Foreign Liabilities and Assets as data)

on March 1997; RBI Bulletin(October 2000)’.@

1.1.1 Claims on Affiliated NAEnterprises

1.1.2 Liabilities to Affiliated NAEnterprises (-)

1.2 Other Capital BoP Table 43 Net flow is added to base data on RBI Bulletin for(in USD) - Stock, which are available in the Flow dataLatest (as article titled ‘Census of India’srelevant) Foreign Liabilities and Assets as

on March 1997; RBI Bulletin(October 2000)’. @

1.2.1 Claims on Affiliated NAEnterprises

1.2.2 Liabilities to Affiliated NAEnterprises (-)

2. Portfolio Investment

2.1 Equity Securities BoP Table: 43 As mentioned for items 1.1 & 1.2 RBI Bulletin for(in USD) - Flow dataLatest (asrelevant)

2.1.1 Monetary Authorities Not Applicable

2.1.2 General Government Not Applicable

2.1.3 Banks International Banking Statement RBI Bulletin –(IBS) (Statement-II) Item 3.1: other Articles onAssets: Investment in Equity InternationalAbroad : Locational Banking Banking Statistics.Statistics

2.1.4 Other Sectors 2.1-2.1.3

2.2 Debt Securities –

2.2.1 Bonds and Notes

2.2.1.1 Monetary Authorities Not Applicable

233


Flow Stocks Source

2.2.1.2 General Government Not Applicable

2.2.1.3 Banks – IBS (Statement-II) Item RBI Bulletin -2.2 → Investment in Other Debt Articles onSecurities International

Banking Statistics

2.2.1.4 Other Sectors Articles on Survey data Foreign Liabilitiesand Assets Survey(FLAS) canvassed byDESACS (BPSD)

2.2.2 Money-market Instruments

2.2.2.1 Monetary Authorities Not Applicable

2.2.2.2 General Government Not Applicable

2.2.2.3 Banks – IBS (Statement-II) Item RBI Bulletin -2.1 → Investment in Foreign Govt. Articles onsecurities International

Banking Statistics

2.2.2.4 Other Sectors – Survey data Foreign Liabilitiesand Assets Survey(FLAS) conducted byDESACS (BPSD)

3. Financial Derivatives – NA

3.1 Monetary Authorities

3.2 General government

3.3 Banks

3.4 Other sectors

4. Other Investment – As per item 4.1.2

4.1 Trade Credit

4.1.1 General Government Not Applicable

4.1.1.1 Long-term

4.1.1.2 Short-term –

4.1.2 Other Sectors

4.1.2.1 Long-term As per the survey Foreign Liabilitiesand Assets Survey(FLAS) conducted byDESACS (BPSD)

4.1.2.2 Short-term – Collected fromDepartment ofEconomic Analysisand Policy (Divisionof Internationalfinance); Datapertain to Exportproceeds notrealised byCorporate Sector

234


Flow Stocks Source

4.2 Loans

4.2.1 Monetary Authorities Not Applicable

4.2.1.1 Long-term

4.2.1.2 Short-term

4.2.2 General Government

4.2.2.1 Long-term (1) Advances to Foreign Govt. and Data on item (1) are(2) Partition Debt Payable by compiled by RBIPakistan (Department of

Economic Analysisand Policy)Data onitem (2) werepublished by RBI(Census of India’sForeign Liabilitiesand Assets as onMarch 1997, RBIBulletin, October2000).

4.2.2.2 Short-term NA

4.2.3 Banks Banks Assets and Liabilities Compiled by RBI(BAL) (Item-5) (DESACS)

4.2.3.1 Long-term Banks’ Assets and Liabilities (BAL) Compiled by RBI(Item-5) (DESACS)


4.2.4 Other Sectors Survey data Foreign Liabilitiesand Assets Survey(FLAS) conducted byRBI, (DESACS)

4.2.4.1 Long-term Not Applicable

4.2.4.2 Short-term Not Applicable

4.3 Currency and Deposits

4.3.1 Monetary Authorities Nil

4.3.2 General Government Balances Held Abroad by RBI (Department ofEmbassies of India Economic Analysis

and Policy)

4.3.3 Banks BAL-Currency (Item-1)+Deposits Compiled by RBI(Item-2) (DESACS)

4.3.4 Other Sectors Survey Foreign Liabilitiesand Assets Survey(FLAS) conducted byRBI (DESACS)

4.4 Other Assets


4.4.1.1 Long-term

4.4.1.2 Short-term

235



4.4.2.1 Long-term Subscriptions to international Included are AFD,Institutions after conversion: IFC, IDA, IBRD,Annual Reports MIGA, ADB. Data

are collected fromrespective website.

4.4.2.2 Short-term Not Applicable

4.4.3 Banks

4.4.3.1 Long-term (1)Consolidated Balance Sheet of Item (1) from RBIOverseas Branches of Indian (Department ofBanks (Liabilities : Head Offices Bankingi.e. HO funds) and (2) BAL Supervision)Item (2)[Vostro (Debit)] compiled by by RBI

(DESACS)


4.4.4 Other Sectors Survey: LIC, Insurance, Mutual Foreign LiabilitiesFund, Corporate and Assets Survey

(FLAS) conducted byRBI (DESACS)

4.4.4.1 Long-term -do- -do-

4.4.4.2 Short-term -do- -do-

5. Reserve Assets

5.1 Monetary Gold Data are published by RBI RBI, RBI Bulletin(Table 4.4)

5.2 Special Drawing Rights -do- -do-

5.3 Reserve Position in the Fund -do- -do-

5.4 Foreign Exchange -do- -do-

5.4.1 Currency and Deposits Data Template on International IMF’s SDDS siteReserves (India page)

5.4.1.1 With Monetary Authorities -do- -do-

5.4.1.2 With Banks -do- -do-

5.4.2 Securities -do- -do-

5.4.2.1 Equities

5.4.2.2 Bonds and Notes

5.4.2.3 Money-market Instruments

5.4.3 Financial Derivatives (net)

5.5 Other Claims

B. Liabilities

1. Direct Investment in Reportingeconomy

1.1 Equity Capital and Reinvested BoP Table 42 Net flow is to be added to Stock; RBI Bulletin,Earnings (In Indian base data are available in the October 2000

Flow Stocks Source

236


Rupee)-Latest article titled ‘Census of India’s(as relevant) Foreign Liabilities and Assets as

on March 1997.

1.1.1 Claims on Direct Investors (-) NA

1.1.2 Liabilities to Direct Investors NA

1.2 Other Capital BoP Table 42 Net flow is to be added to Stock; RBI Bulletin,(In Indian base data are available in the October 2000Rupee)-Latest article titled ‘Census of India’s(as relevant) Foreign Liabilities and Assets as

on March 1997.

1.2.1 Claims on Direct Investors (-) NA

1.2.2 Liabilities to DirectInvestors $$$ NA


2.1 Equity Securities

2.1.1 Banks @@

2.1.2 Other Sectors $$ BoP Table 42 Net flow is to be added to Stock; RBI Bulletin,(In Indian base data are available in the October 2000Rupee)-Latest article titled ‘Census of India’s(as relevant) Foreign Liabilities and Assets

as on March 1997;

2.2 Debt securities

2.2.1 Bonds and notes

2.2.1.1 Monetary Authorities Nil

2.2.1.2 General Government Non resident Government (NRG) RBI (DESACS)(Purpose code ‘02’)

2.2.1.3 Banks External Debt—V.b) Securitised External Debtborrowings (excluding FCCB) Statistics

2.2.1.4 Other Sectors ## India’s External Debt - V.b) External DebtSecuritised Borrowings [Only Statistics; RBIFCCB]


2.2.2.1 Monetary Authorities Nil

2.2.2.2 General Government NRG (Treasury Bill) Compiled by RBI(DESACS)

2.2.2.3 Banks Nil

2.2.2.4 Other Sectors Nil

3. Financial Derivatives NA


3.2 General Government

3.3 Banks

3.4 Other Sectors

Flow Stocks Source

237


4. Other Investment

4.1 Trade Credits


4.1.1.1 Long-term Export credit component of External DebtBilateral credits - India’s External Statistics, MoF, GoI.Debt


4.1.2 Other Sectors

4.1.2.1 Long-term India’s External Debt - suppliers’ External Debtcredit + Export credit for defence Statistics, MoF, GoI.purposes

4.1.2.2 Short-term India’s External Debt: Others: External DebtTrade related (Short term debt Statistics, MoF, GoI.over six months)

4.2 Loans

4.2.1 Monetary Authorities

4.2.1.1 Use of Fund Credit & International Financial Statistics IMFloans from the fund (IFS): Page 534 : India : Total fund

credit & loans outstandingExcluding SDR

4.2.1.2 Other Long-term Nil

4.2.1.3 Short-term Nil


4.2.2.1 Long-term India’s External Debt –Multilateral External Debt(A)+Bilateral (A)+Rupee Debt Statistics, MoF, GoI.


4.2.3 Banks Nil

4.2.3.1 Long-term India’s External Debt[Multilateral External Debt→Non Govt-→Non concessional → Statistics. MoF, GoIFinancial Institutions + Bilateral→ Non Govt. → (Concessional →Financial Institutions + Nonconcessional → financialinstitutions)]


4.2.4 Other Sectors

4.2.4.1 Long-term** India’s external Debt-[Multilateral External Debt→ Non Govt. → Non concessional Statistics, MoF,→ a)Public sector + b) Private GoI.RBI (DESACS)sector )] + [ Bilateral → Non Govt.→ concessional → (Private +Public sector) + Bilateral -> NonGovt. → Non concessional →(Private + Public sector) ] + Buyer’scredits + Commercial Banking

Flow Stocks Source

238


loans + Loans/ securitizedborrowings etc. with multilateral/bilateral guarantee and IFC(W)]—ECB(FDI component collected fromECB section



4.3.1 Monetary Authorities NRG(Purpose’01') Compiled by RBI(DESACS)

4.3.2 General government Nil

4.3.3 Banks @ India’s External Debt-. NRI & FC External DebtDeposits+ NRI deposits up to Statistics1 year

4.3.4 Other sectors Nil

4.4 Other Liabilities


4.4.1.1 Long-term

4.4.1.2 Short-term

4.4.2 General Government Nil

4.4.2.1 Long-term

4.4.2.2 Short-term

4.4.3 Banks

4.4.3.1 Long-term Nil

4.4.3.2 Short-term BAL NOSTRO (Debit: Code Compiled by RBI(convert into Indian rupees (DESACS)then into USD with March endexchange rate of the referenceyear)

4.4.4 Other sectors Survey Foreign Liabilitiesand Assets Survey(FLAS) conducted byRBI (DESACS)

4.4.4.1 Long-term

4.4.4.2 Short-term

NA : Not Available

$$ : Foreign Direct Investment (FDI) & Portfolio Investment are not adjusted for price changes.

$$$ : All liabilities (other than equity) between direct investor & direct investment enterprises are treated as other capital.

@ : Include accrued interest. Do not include non-resident non-repatriable deposits from 1997-2001.

** : Includes Buyers’ Credit. Loan transactions between direct investor & direct investment enterprises are treated as othercapital.

@@ : Equity Investments in Banks by Non-residents included under FDI.

Reference:RBI Census of India’s Foreign Liabilities and Assets as on March 1997; RBI Bulletin (October 2000). (2000)

Flow Stocks Source

239


5.6. STATISTICS ON FOREIGN EXCHANGERESERVES

Reserve Bank of India has been publishing thedata on Foreign Exchange Reserves to fulfillstatutory and international obligations as amember of International Monetary Fund (IMF).The data on Foreign Exchange Reserves arepublished at prescribed intervals in variouspublications and/or on its official websitewww.rbi.org.in for use by domestic andinternational entities and Research personnel.

5.6.1. Concepts of India’s InternationalReserves

India’s concept of international reserves conformsto IMF’s Balance of Payments Manual, fifthedition, Chapter XXI. Reserves are held for thepurpose of intervention in the domestic foreignexchange markets, providing foreign currencyliquidity to the Government and as backing fordomestic currency.

Data are classified and presented under theseheads.

5.6.2. Concepts and Definitions of ForeignExchange Reserves

The Foreign Exchange Reserves consist of thefollowing components:

i. Foreign Currency Assets (FCA)

ii. Gold

iii. Special Drawing Rights (SDR)

iv. Reserve Tranche Position in IMF (RTP)

Reserve Bank of India has direct control overthe Foreign Currency Assets and Gold, whichare reflected in its Balance sheet while SpecialDrawing Rights and Reserve Tranche Position inIMF are reflected in the books of Government ofIndia. SDRs and RTP, which appear in the booksof the Government but are readily available toReserve Bank (monetary authority) for use, areincluded in Foreign Exchange Reserves.

Foreign exchange reserves are deployed as perthe provisions of the Reserve Bank of India Act1934. Broadly, the FCA comprises:

i. Cash Balance in Nostro accountsmaintained with various Central Banks.

ii. Deposits with

a. Central Banks

b. Foreign Commercial Banks

c. Bank for International Settlements

d. International Bank for Reconstructionand Development (IBRD)

iii. Treasury Bills - Sovereign

iv. Securities and bonds (Foreign Securities) –Sovereign and supranational

The Foreign Currency Assets are reflected in thebalance sheet of Reserve Bank as:

i. Foreign Securities (Issue DepartmentBalance sheet )

ii. Balances held abroad

iii. Investments

Foreign Exchange Reserves or Reserve Assetsare defined as consisting of those external assetsthat are readily available to and controlled bymonetary authorities for direct financing ofpayments imbalances, for indirectly regulatingthe magnitude of such imbalances throughintervention in exchange markets to affect thecurrency exchange rate, and/or for otherpurposes. The category of reserve assets, asdefined in the Manual, comprises Monetary Gold,Special Drawing Rights of IMF, RTP with IMF,Foreign Exchange Assets (consisting of currencyand deposits and securities), and other claims.Securities that do not satisfy the requirementsof reserve assets are included in direct investmentand portfolio investment.

Foreign Exchange or Currency Assets includesmonetary authorities’ claims on nonresidents inthe forms of ECUs, currency bank deposits,government securities, other bonds and notes,money market instruments, financial derivatives,equity securities, and non-marketable claimsarising from arrangements between central banksor governments. (Foreign exchange covers claimsthat are shown as the foreign exchangecomponent of the series for international liquiditypublished by the Fund in International FinancialStatistics.)

240


Monetary Gold is gold owned by the authorities(or by others who are subject to the effectivecontrol of the authorities) and held as a reserveasset. Other gold (non-monetary gold, possiblyincluding commercial stocks held for tradingpurposes by authorities who also own monetarygold) owned by any entity is treated in thisManual as any other commodity. Transactionsin monetary gold occur only between monetaryauthorities and their counterparts in othereconomies or between monetary authorities andinternational monetary organizations. Like SDRs,monetary gold is a reserve asset for which thereis no outstanding financial liability.

Special Drawing Rights of IMF (SDRs) areinternational reserve assets created by theInternational Monetary Fund to supplement otherreserve assets that are periodically allocated toIMF members in proportion to their respectivequotas. SDRs are not considered liabilities of theFund, and IMF members to whom SDRs areallocated do not incur actual (unconditional)liabilities to repay SDR allocations. The Funddetermines the value of SDRs daily by summing,in U.S. dollars, the values—which are based onmarket exchange rates—of a weighted basket ofcurrencies. The basket and weights are subjectto revision from time to time. SDRs can be usedto acquire other members’ currencies (foreignexchange), to settle financial obligations, and toextend loans. Changes in the SDR holdings ofmonetary authorities can arise through (i)transactions involving SDR payments to orreceipts from the Fund, other participants in theSDR Department of the Fund, or other holdersor (ii) allocation or cancellation. Transactionssuch as those enumerated under (i) are includedin the balance of payments; allocations orcancellations are not entered in the balance ofpayments but are reflected in the internationalinvestment position.

Reserve Tranche Position of IMF member isdefined as the member’s position in the IMF’sGeneral Resource Account which is recordedunder the category for reserve assets. Themember’s reserve position is the sum of thereserve tranche purchases that a member maydraw upon and any indebtedness of the Fund(under a loan agreement) that is readily

repayable to the member. Reserve tranchepurchases are purchases from the Fund of othercurrencies that do not cause Fund holdings ofa member’s currency to exceed the member’squota (minus holdings that reflect the member’suse of Fund credit). A purchase from the Fundis recorded as an increase in foreign exchangeholdings and a decrease in the member’s reserveposition in the Fund; a repurchase is recordedas a decrease and an increase, respectively.Purchases in the reserve tranche are notregarded as a use of Fund credit, are not subjectto charges, and do not require repurchase. RTP,shown as a memo item with effect from May 23,2003, is included in the reserves from theweekend ended April 2, 2004.

5.6.3. Special Data Dissemination Standards(SDDS) of the International MonetaryFund (IMF) - International Reservesand Foreign Currency Liquidity DataTemplate

The SDDS was established in 1996 to guidecountries that have, or that might seek, accessto international capital markets in thedissemination of economic and financial data tothe public.1 This site provides information abouteconomic and financial data disseminated bymember countries that subscribe to the SDDS.

Reserve Bank subscribed to SDDS effectiveDecember 27, 1996. Metadata was posted on theDSBB – Dissemination Standards Bulletin Boardon October 30, 1997. Reserve Bank completelysubscribed to Metadata on December 14, 2001.The IMF requires that data should be availableat regular intervals in public domain. TheReserve Bank publishes these data in itspublications. The Reserve Bank also publisheson its website, advance dissemination of releasecalendars for these data categories in accordancewith SDDS requirements.

5.6.3.1. Coverage characteristics

There are two publications relating to the reserveassets i.e Foreign Exchange Reserves under WSSand the data Template on International Reserves

1. http://dsbb.imf.org/Applications/web/sddshome

241


and Foreign Currency Liquidity under SDDS.Data is disseminated in US dollars (in millions)and Indian Rupees (in crores, where one crore =10 million) on the Foreign Exchange Reserves(comprising Foreign Currency Assets and Goldheld by RBI and SDRs and RTP with IMF) underWSS and in US dollars (in millions) only underdata template on International Reserves andForeign Currency Liquidity.

5.6.3.2. Periodicity

Data are released on weekly basis (on week-end)for the Foreign Exchange Reserves and onmonthly basis (on month-end) for the DataTemplate on International Reserves and ForeignCurrency Liquidity.

5.6.3.3. Timeliness

Data are released one week after the referenceweek-end with respect to Foreign ExchangeReserves and one month after the referencemonth-end for the Data Template onInternational Reserves and ForeignCurrency Liquidity.

5.6.4. Integrity and Quality of Data

The terms and conditions of dissemination ofofficial statistics include those relating to theconfidentiality of individually identifiableinformation. The data is compiled in accordancewith the terms of Section 53 (1) of the ReserveBank of India Act 1934, which requires that theRBI furnish a weekly statement of accounts ofthe Issue Department and the BankingDepartment to the Central Government. The RBIAct 1934 is published in Hindi and English andis available, for a fee, from book stores sellinggovernment publications, from the Controller ofPublications, Civil Lines, Delhi - 110006, India.The data on international reserves aredisseminated by the RBI as a service to the public.

Data are compiled according to the 5th editionof the IMF’s “Balance of Payments Manual”. Themethodology used for compilation is indicatedin footnotes in the monthly “Reserve Bank ofIndia Bulletin” and in the Data Template onInternational Reserves and Foreign CurrencyLiquidity.

5.6.5. Dissemination of Foreign ExchangeReserves or Assets

The statistics related to country’s ForeignExchange Reserves are disseminated by ReserveBank in the following publications and frequency.

� At weekly intervals (under Table 2) in theWeekly Statistical Supplement (WSS) witha lag of one week at every week-end. Thedata are presented in Indian Rupees as wellas US dollar. Data include variation inReserve Asset (component-wise) overprevious week, over last December and closeof previous financial year, i.e., March 31.

� At monthly intervals (under Table No.44) inReserve Bank of India Bulletin; the datainclude reserve assets (component-wise) formonth-wise position for the current andimmediately preceding two financial years.The working notes are indicated under“Notes on Tables” of the bulletin.

� Weekly, monthly, quarterly, and annualdata on Foreign Exchange Reserves are alsopublished in the Handbook of Statistics onIndian Economy (Table 154; Table 197 andTable 201). These data were included earlierin the Report on Currency and Finance,Vol.II for current and previous years underreference of the publication.

� The RBI “Annual Report” publishes quarterlytime series data for the last three years on:Foreign currency assets, gold, SDRs and theRTP with IMF

5.7. THE NOMINAL EFFECTIVE EXCHANGERATE (NEER) AND THE REALEFFECTIVE EXCHANGE RATE (REER)OF THE INDIAN RUPEE

The indices of NEER and REER are often usedas indicators of external competitiveness. Theseindices are essentially drawn from thepurchasing power parity doctrine. NEER is aweighted average of bilateral nominal exchangerates of the home currency in terms of foreigncurrencies. REER is a weighted average of NEERadjusted for inflation differential between Indiaand the trading partner. Generally speaking, acountry has to adjust its exchange rate (in case

242


of fixed exchange rate) or the exchange rateadjusts itself (in case of flexible exchange rate)to the basic fundamentals of the domesticeconomy vis-à-vis major trading partners likeinflation differential and the movement in theother exchange rates.

There has been considerable discussion onmovements in Nominal and Real EffectiveExchange Rate (NEER and REER) of the Indianrupee. The stated stand of the RBI on this issuein the recent period has been that RBI does notconsider REER to be an effective tool formanagement of short-term movements inexchange rate. As there is certain arbitrarinesswith respect to selection of base year, weightsand prices, the use of REER could be suited totrack the movements of currency over of timerather than exchange rate levels at any particularpoint of time.

REER movements are subject to variousinfluences, including capital flows, and theestimation of REER raises several methodologicalissues, e.g., the choice of a basket of currencies,the choice of the base period, the choice ofweights and the choice of price index.Nevertheless, in the long run, this index couldbe useful to assess the movements in theexchange rate of rupee vis-à-vis cross currencymovements and inflation differential.

The Reserve Bank of India has been constructingfive-country and thirty six-country indices ofNEER and REER as part of its communicationpolicy and to aid researchers and analysts. Thefive-country (U.S.A, Germany, France, Japan andU.K) NEER and REER, which is a quick index,was introduced by the RBI (Department ofExternal Investments and Operations (DEIO)) inJuly 1998 and was published in the RBI Bulletinevery month. Additionally, the 5-country NEERand REER were constructed on a daily basis forclose monitoring of the nominal and realmovement in the exchange rate of the rupee. Thechanging trade pattern of India, which renderedthe fixed trade weights in the case of 5-countryNEER/REER anachronistic and the introductionof single euro notes and coins for the entireEurozone with effect from January 1, 2002,replacing the existing national currencies, some

of which formed part of RBI’s existing indices ofNEER/REER, necessitating the exploration ofpossibility of computing new series of NEER/REER with revised set of currencies and newweights. In December 2005, RBI replaced itsexisting 5-country indices with new six-currencyindices of NEER/REER. It also revised its thirtysix-country indices and replaced them with anew 36-currency indices of NEER/REER.

The new six-currency indices include U.S.A,Eurozone, U.K., Japan, China and Hong KongSAR. The new indices have two new currencies- both Asian - the Chinese Renminbi and theHong Kong Dollar. Two currencies in the existingfive-country series, viz., French franc andDeutsche mark have been replaced by Euro inthe new indices. China and Hong Kong SAR havebecome India’s important trading partners andtogether accounted for around 9 per cent ofIndia’s foreign trade in 2004-05. The sixcountries/regions, represented by the sixcurrencies, together accounted for around 40 percent of India’s total foreign trade in 2004-05 ascompared with a lower coverage of around 22per cent of India’s total foreign trade in the caseof the existing five-country index. China’s sharein India’s foreign trade, which stood at a paltry0.19 per cent in 1991-92 increased to 6.1 percent in 2004-05. The increase has beenespecially pronounced in the last 4 years. Chinais likely to emerge as a major trading partner ofIndia in the years to come and a big competitortoo. Thus, including China takes account of thirdcountry competition in a limited way. TheChinese renminbi (RMB) is likely to gain inimportance in future as China has already takensome steps on July 21, 2005 to make itsexchange rate regime more flexible. Thus, itmakes eminent sense to include China in thenew 6-currency indices of NEER/REER.Including Hong Kong in the new indices takescare of the trade with mainland China, which isbeing routed through Hong Kong. The inclusionof China and Hong Kong SAR also takes care ofthe problem of falling share in India’s totalforeign trade of the countries included in existing5-country indices and reflects an increasingrecognition of the Indian economy’s rapidlygrowing integration with the rest of Asia.

243


5.7.1. Note on Methodology

5.7.1.1. Definition

The six-currency trade based NEER and REERare constructed on a daily as well as monthlybasis. The currencies chosen are US Dollar,Euro, Pound sterling, Japanese yen, Chineserenminbi and Hong Kong Dollar.

NEER: NEER is the weighted geometric averageof the bilateral nominal exchange rates of thehome currency in terms of foreign currencies.In terms of formula,

6NEER = II (e/e

i)w i

i=1

REER : REER is the weighted average of NEERadjusted by ratio of domestic inflation rate toforeign inflation rates. In terms of Formula,

6REER = II [(e/e

i) (P/P

i) ]w i

i=1

Where e : Exchange rate of rupee againsta numeraire (SDRs)

(i.e., SDRs per Rupee) (in indexform)

ei

: Exchange rate of currency iagainst the numeraire (SDRs)(i.e., SDRs per currency i)

(i= US Dollar, Euro, PoundSterling, Japanese Yen, ChineseRenminbi, Hong Kong Dollar)

wi: Weights attached to currency/

country i in the index

P : India’s wholesale price index (inIndex form)

Pi: Consumer Price Index of Country

i (in Index form)

5.7.1.2. Weighting Scheme

The existing five-country indices use fixed tradeweights, which are based on the average ofIndia’s bilateral trade (exports plus imports) withthe countries in the index during the five-year

period from 1992-93 to 1996-97. The new indiceswill use 3-year moving average trade weights inplace of the present fixed trade weights in orderto suitably reflect the changing pattern of India’sforeign trade with its major trading partners.

The weights are constructed on the basis ofgeometric average of India’s bilateral trade(exports plus imports) with countries/regionsrepresented by the six-currencies during thethree year period, which gets updated every year.Thus, unlike the earlier practice of having fixedweights, the new set of weights will be differentevery year. The average share of each countryin the average total trade for the three years,e.g., 2002-03 to 2004-05, is normalised to arriveat the requisite weights (wi). Weights used inthe computation of new six-currency series areas follows (Table 5.3):

Table 5.3: Weighting Pattern for Six-Currency Series

(In per cent)

Year Euro Japan UK USA Hong- Chinakong

1993-94 42.06 14.01 12.04 26.33 4.55 1.01

1994-95 40.25 13.50 11.73 26.95 5.40 2.17

1995-96 39.22 13.44 11.33 26.95 6.07 2.98

1996-97 38.95 12.87 11.25 27.29 6.15 3.49

1997-98 39.28 11.76 11.55 27.46 6.03 4.20

1998-99 38.71 11.03 11.82 28.21 6.03 4.20

1999-00 37.79 10.64 11.86 28.59 6.68 4.44

2000-01 36.67 9.92 12.15 29.12 7.48 4.65

2001-02 35.88 9.30 12.06 29.08 8.02 5.67

2002-03 35.55 8.31 11.67 29.51 7.67 7.29

2003-04 35.52 7.85 10.84 28.90 7.55 9.34

2004-05 35.12 7.15 10.13 28.19 7.45 11.96

5.7.2. Sources and Procedures

For data on exchange rate, the daily morningeastern market exchange rates of the fivecurrencies, viz., euro, pound sterling, Japaneseyen, Hongkong dollar and Chinese renminbi arecrossed with SDR-USD rate. For US dollar, SDR-USD rate is taken into consideration. In the case

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of the Indian rupee, RBI’s reference rate for USDollar, announced at 12.00 noon, is crossed withSDR-USD rate to arrive at SDR-Rs. rate. Theweekly all commodities wholesale price index(WPI) is used as an index of inflation for India inREER. The WPI data are updated every week.These data are available with a time lag of 2weeks. For the 6 countries/regions representedby the 6 currencies, monthly consumer priceindices (CPI) are used as a measure of inflationin these countries. In the case of euro,Harmonised Index of Consumer Prices (HICP) hasbeen used. China does not provide inflationindices but provides year-on-year monthly growthrates, which have been converted into indices bytaking 1993-94 as the base year. The CPI data ofthese countries/regions are taken from onlineinformation system like Bloomberg as soon asthese are announced by them. Later, these CPIdata are substituted, wherever possible, by theprice indices available in the InternationalFinancial Statistics (IFS), International MonetaryFund, which comes with a time lag.

The exchange rates have been defined in indirectquotes so that the appreciation/depreciation ofthe rupee is directly reflected by a rise/fall inindex value. Thus, a rise in index represents anappreciation of rupee relative to the sixcurrencies and a fall in index representsdepreciation of rupee relative to these currencies.As against the practice of having three base yearsin the case of five-country indices, viz., 1991-92, 1993-94 and 2003-04 (financial years basedon monthly averages), the last being a movingbase updated every year to facilitate comparisonwith a more recent period, the new six-currencyindices will have 1993-94 as fixed base and2003-04 as a moving base, which would changeevery year as at present. In this connection, itmay be mentioned that since the indices aregeometric series, the percentage differencebetween any two period would be same in sucha series, whatever be the base year.

The base year 1993-94 will remain fixed forseveral years, while the base year 2003-04 willbe a moving one (i.e., from April 1, 2006 thebase of 2003-04 would be changed to 2004-05and so on). The indices are given on a financialyear basis (average) since 1993-94.

REER and NEER of their respective nationalcurrencies are being computed by most of thecountry authorities and also by many globalfinancial institutions/investment banks/multilateral institutions like IMF to gauge thecompetitiveness of various currencies and theirlikely future movements. Many countries arereporting NEER and REER to the IMF. Thesedata are published in the International FinancialStatistics (IFS), which is a monthly publication.Depending on the availability of data, IMF alsopublishes REER for some advanced countriesbased on other cost indicators like relative unitlabour cost and relative value added deflators,relative export unit values in manufacturing andrelative wholesale prices, apart from REER basedon consumer prices. The methodology used byRBI for computing 6-currency REER and NEERindices is in consonance with best internationalpractice adopted by top multilateral institutionlike IMF and other countries/institutions in thisregard.

Indices of six-currency NEER and REER of theIndian Rupee are published in the Reserve Bankof India Bulletin under Table 51.

5.8. STATISTICS ON TURNOVER IN FOREXMARKET

5.8.1. Data Source

Foreign exchange turnover data provides ameasure of market activity and can also providea rough proxy for market liquidity. To gauge thesize of the foreign exchange markets, forexturnover data is collected from authorized dealersin India.

The Reserve Bank of India, Forex MarketsDivision, Foreign Exchange Department, collectsdata in respect of foreign exchange transactionson a daily basis through the FEMIS a wide areanetwork. All the authorized dealers are requiredto send a file containing details of Merchant(Spot, Forwards and Cancellation of Forwards)and Interbank (Spot, Swap & Forwards)purchases and sales data. The data so collectedis then sent to Press Relations Division fordissemination on a weekly basis through theWeekly Statistical Supplement.

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5.8.2. Definitions of terms related to forextransactions

Merchant: Where one of the parties to thecontract is not a bank (AD).

Interbank: Where both the parties to the contractare banks (includes transactions with RBI)

Spot transaction: Single outright transactioninvolving exchange of two currencies at a rateagreed on the date of contract, for value ordelivery within two business days and includescash (same day delivery)& tom (next day delivery)transactions.

Outright forward: Transactions involving theexchange of two currencies at a rate agreed onthe date of contract for value or delivery at sometime in future (more than two business dayslater).

Cancellation of forwards: On the purchase sidethe forward merchant sale contracts cancelledand on the sale side cancelled forward purchasecontracts are indicated.

Swap: Transaction which involves the actualexchange of two currencies (principal amountonly) on a specific date at a rate agreed at thetime of the conclusion of the contract and areverse exchange of the same two currencies ata date further in the future at a rate agreed toat the time of the contract. Only foreign exchangeswaps between ADs are to be reported. Doublecounting is not eliminated.

The data forwarded by ADs through the dial upmode is merged in the FEMIS system and reportsare generated on-line.

Spot Rate: The rate of exchange quoted fortransactions involving immediate settlement. Itusually refers to the current market rate for acurrency. Interest is either added on (premium)or subtracted from (discount) this rate todetermine pricing for non-spot trades, which arereferred to as forwards in the FX market.

Forward Premium: Forward premium is thedifference between the respective forward rate(i.e. the rate at which a foreign exchange contractis struck today for settlement at a specifiedfuture date) and spot rate. This indicates the

supply and demand of foreign exchange for thisduration. This also indicates “expectation oninterest differentials”.

Forward Rate Agreement (FRA): A contract forborrowing or lending at a stated interest rateover a stated time period that begins at sometime in the future Parties wishing to protectthemselves against future interest-ratemovements use FRAs.

5.9. STATISTICS ON PURCHASE/SALE OFFOREX BY RBI

Over the years, the exchange rate of rupee hasevolved from one being fixed by the central bankto one being determined by the market forces ofdemand and supply. During the period 1975-92, the exchange rate of rupee was officiallydetermined by the RBI in terms of weightedbasket of currencies of India’s major tradingpartners and the exchange rate regime wascharacterized by daily announcement, by theRBI, of its buying and selling rates to AuthorizedDealers. Following the recommendations of theRangrajan Committee on Balance of Payments,the Liberalised Exchange Rate ManagementSystem (LERMS) involving dual exchange ratefor the rupee was instituted in March 1992.Under LERMS, foreign exchange amounting to40 per cent of the receipts from current accounttransactions was to be surrendered by the ADsto RBI, at the official pre-announced exchangerate. The exchange rate for the sale of theremaining 60 per cent could be market-determined. LERMS was meant to be transitionalmechanism for enabling a movement from themanaged regime to a market-determined system.The switch to market-determined exchange rateregime took place in March 1993, wherein theexchange rate of rupee was determined by themarket forces of demand and supply in the forexmarket.

5.9.1. Exchange rate management objectives

The exchange rate policy of RBI has beenarticulated from time to time in monetary policystatements, annual publications and also invarious speeches on the subject by the TopManagement of the Bank. The objective has beenmaintenance of orderly conditions in the market,

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correcting any temporary mismatch in thesystem and curbing excessive volatility orspeculative activity. During times of volatility, RBIhas also been issuing press releases forcommunicating its own assessment of the marketmovements, reiterating its commitment ofmaintaining orderly conditions in the market andannouncing policy measures, if any, forstabilizing the market. The data on purchase/sales operations is placed in the public domainwith a one month lag. (Table No 48- RBI Bulletin).

5.9.2. Intervention operations of RBI

Foreign exchange intervention can be defined asa transaction by an official agent of thegovernment, to influence the value of theexchange rate. Put simply, it can be defined asthe official purchase or sale of foreign assetsagainst domestic assets in the foreign exchangemarket.

According to Section 40 of the RBI Act, ReserveBank can buy or sell foreign currency to anyauthorized person. In addition to US dollar, RBIhas the option to use the Euro as an interventioncurrency. Generally, intervention is used as atool for regulating the external value of rupee.However, intervention can also be used as a toolof monetary policy because of its impact onliquidity. When the central bank buys foreignexchange from the market, it infuses anequivalent amount of rupee funds into thesystem (injection of liquidity); the oppositehappens when it sells foreign exchange in thedomestic market. Over the years RBI hasintervened in the spot, forward and swapmarkets either directly or indirectly

� Direct intervention - Banks are contacteddirectly and asked to quote a two way priceand the RBI buys or sells at the quotedrate. In 1995-96, most of the transactionswere done directly with the authorizeddealers.

� Indirect intervention - RBI intervenesindirectly through select public sectorbanks. These banks, in turn, buy or sell

on behalf of RBI in the market. Indirectinterventions became the primary mode ofintervening in the forex market by RBI since1997-98.

Interventions are ordinarily done in the spotmarket. However, RBI also operates in theforward and swap markets for purposes suchas correcting distortions in the forward premia,mitigating cash-dollar shortage in the market,creating forward forex assets (to meet large bulletredemption like RIB), etc.

5.9.3. Statistics On Daily Foreign ExchangeReference Rates

Effective from March 1, 1993, following theunification of exchange rates, the era of freefloating market determined exchange rate regimeof the rupee, based on demand and supplybegan. Accordingly, the Reserve Bank isannouncing the rupee reference rate for the USDollar and Euro daily at 12.00 noon. This is anindicative rate, which is the average of the middlerates of the 12.00 noon quotes obtained from afew select banks in Mumbai. The Reference Rateis given out in a Press Release daily and isplaced on the RBI website, and also in the RBIBulletin (Table No. 47).

References

1. BPM5(1993): Balance of Payments Manual(5-th edition), 1993, International MonetaryFund (IMF).

2. Balance of Payments Compilation Guide,1996, IMF.

3. Balance of Payments Text Book, 1996, IMF.

4. International Investment Position, A guideto Data Sources, 2002.

5. RBI (1951): Report on the Census of India’sForeign Liabilities and Assets as on 30-thJune, 1948; Reserve Bank of India, 1951.

6. RBI (2000): Census of India’s ForeignLiabilities and Assets as on March 1997,RBI Bulletin, October.

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A. Assets

1. Direct Investment Abroad

1.1 Equity Capital and ReinvestedEarnings

1.1.1 Claims on AffiliatedEnterprises

1.1.2 Liabilities to AffiliatedEnterprises (-)

1.2 Other Capital

1.2.1 Claims on AffiliatedEnterprises

1.2.2 Liabilities to AffiliatedEnterprises (-)





2.1.3 Banks

2.1.4 Other Sectors

2.2 Debt Securities

2.2.1 Bonds and Notes

2.2.1.1 Monetary Authorities

2.2.1.2 General Government

2.2.1.3 Banks

2.2.1.4 Other Sectors




2.2.2.3 Banks


3. Financial Derivatives


3.2 General government

3.3 Banks

3.4 Other sectors

Annex 5.1: International Investment Position: Format as Prescribed under SDDS by IMF

4. Other Investment

4.1 Trade Credits


4.1.1.1 Long-term

4.1.1.2 Short-term

4.1.2 Other Sectors

4.1.2.1 Long-term

4.1.2.2 Short-term

4.2 Loans


4.2.1.1 Long-term

4.2.1.2 Short-term


4.2.2.1 Long-term

4.2.2.2 Short-term

4.2.3 Banks

4.2.3.1 Long-term

4.2.3.2 Short-term

4.2.4 Other Sectors

4.2.4.1 Long-term

4.2.4.2 Short-term




4.3.3 Banks

4.3.4 Other Sectors

4.4 Other Assets


4.4.1.1 Long-term

4.4.1.2 Short-term


4.4.2.1 Long-term

4.4.2.2 Short-term

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4.4.3 Banks

4.4.3.1 Long-term

4.4.3.2 Short-term

4.4.4 Other Sectors

4.4.4.1 Long-term

4.4.4.2 Short-term

5. Reserve Assets

5.1 Monetary Gold

5.2 Special Drawing Rights

5.3 Reserve Position in the Fund

5.4 Foreign Exchange

5.4.1 Currency and Deposits

5.4.1.1 With MonetaryAuthorities

5.4.1.2 With Banks

5.4.2 Securities

5.4.2.1 Equities

5.4.2.2 Bonds and Notes

5.4.2.3 Money-marketInstruments

5.4.3 Financial Derivatives (net)

5.5 Other Claims

B. Liabilities

1. Direct Investment in Reporting economy

1.1 Equity Capital and ReinvestedEarnings

1.1.1 Claims on Direct Investors(-)

1.1.2 Liabilities to Direct Investors

1.2 Other Capital

1.2.1 Claims on Direct Investors(-)

1.2.2 Liabilities to Direct Investors



2.1.1 Banks

2.1.2 Other Sectors

2.2 Debt securities

2.2.1 Bonds and notes



2.2.1.3 Banks





2.2.2.3 Banks


3. Financial Derivatives


3.2 General Government

3.3 Banks

3.4 Other Sectors

4. Other Investment

4.1 Trade Credits


4.1.1.1 Long-term

4.1.1.2 Short-term

4.1.2 Other Sectors

4.1.2.1 Long-term

4.1.2.2 Short-term

4.2 Loans


4.2.1.1 Use of Fund Credit& loans from thefund

4.2.1.2 Other Long-term

4.2.1.3 Short-term

Annex 5.1: International Investment Position: Format as Prescribed under SDDS by IMF (Contd.)

249



4.2.2.1 Long-term

4.2.2.2 Short-term

4.2.3 Banks

4.2.3.1 Long-term

4.2.3.2 Short-term

4.2.4 Other Sectors

4.2.4.1 Long-term

4.2.4.2 Short-term



4.3.2 General government

4.3.3 Banks

4.3.4 Other sectors

Annex 5.1: International Investment Position: Format as Prescribed under SDDS by IMF (Concld.)

4.4 Other Liabilities


4.4.1.1 Long-term

4.4.1.2 Short-term


4.4.2.1 Long-term

4.4.2.2 Short-term

4.4.3 Banks

4.4.3.1 Long-term

4.4.3.2 Short-term

4.4.4 Other sectors

4.4.4.1 Long-term

4.4.4.2 Short-term

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The activities of non-banking financial companies(NBFCs) in India have undergone qualitativechanges over the years through functionalspecialisation. The role of NBFCs as effectivefinancial intermediaries has been well recognisedas they have inherent ability to take quickerdecisions, assume greater risks, and customisetheir services and charges more according to theneeds of the clients. While these features, ascompared to the banks, have contributed to theproliferation of NBFCs, their flexible structuresallow them to unbundle services provided bybanks and market the components on acompetitive basis. The distinction between banksand non-banks has been gradually gettingblurred since both the segments of the financialsystem engage themselves in many similar typesof activities. At present, NBFCs in India havebecome prominent in a wide range of activitieslike hire-purchase finance, equipment leasefinance, loans, investments, etc. By employinginnovative marketing strategies and devisingtailor-made products, NBFCs have also been ableto build up a clientele base among thedepositors, mop up public savings and commandlarge resources as reflected in the growth of theirdeposits from public, shareholders, directors andother companies, and borrowings by issue ofnon-convertible debentures, etc. Consequently,the share of non-bank deposits in householdsector savings in financial assets, increased from3.1 per cent in 1980-81 to 10.6 per cent in 1995-96. In 1998, the definition of public deposits wasfor the first time contemplated as distinct fromregulated deposits and as such, the figuresthereafter are not comparable with those before.

6. NON-BANKING FINANCIAL COMPANIES

The importance of NBFCs in delivering credit to theunorganised sector and to small borrowers at thelocal level in response to local requirements is wellrecognised. The rising importance of this segmentcalls for increased regulatory attention and focusedsupervisory scrutiny in the interests of financialstability and depositor protection (Box 6.1).

In response lo the perceived need for betterregulation of the NBFC sector, the Reserve Bankof India (RBI) Act, 1934 was amended in 1997,providing for a comprehensive regulatoryframework for NBFCs. The RBI (Amendment) Act,1997 conferred powers on the RBI to issuedirections to companies and its auditors, prohibitdeposit acceptance and alienation of assets bycompanies and initiate action for winding up ofcompanies. The Amendment Act provides forcompulsory registration with the RBI of allNBFCs, irrespective of their holding of publicdeposits, for commencing and carrying onbusiness of a non-banking financial institution;minimum entry point norms; maintenance of aportion of deposits in liquid assets; and creationof reserve fund and transfer of 20 per cent ofprofit after tax but before dividend annually tothe fund. Accordingly, to monitor the financialhealth and prudential functioning of NBFCs, theRBI issued directions to companies on:acceptance of public deposits; prudential normslike capital adequacy, income recognition, assetclassification, provisioning for bad and doubtfulassets, exposure norms and other measures.Directions were also issued to the statutoryauditors to report non-compliance with the RBIAct and regulations to the RBI, and Board ofDirectors and shareholders of the NBFCs.

Box 6.1: An Overview of Regulation of NBFCs

(1) Mission

To ensure that

� the financial companies function on healthylines,

• these companies function in consonance

(3) Basic Structure of Regulatory andSupervisory Framework

Prescription of prudential norms akin to thoseapplicable to banks,

Submission of periodical returns forthe purpose of off-site surveillance,

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Non-Banking Financial Companies

6.1. Non-Banking Financial EntitiesRegulated by the RBI

The developments in the NBFC sector in termsof policies and performance during 2001-02 andfor the subsequent periods (to the extentinformation is available) are discussed in thesubsequent paragraphs.

Non-banking financial entities partially or whollyregulated by the RBI include: (a) NBFCs

comprising equipment leasing (EL), hire purchasefinance (HP), loan (LC), investment (1C) (includingprimary dealers3 (PDs)) and residuary non-banking (RNBC) companies; (b) mutual benefitfinancial company (MBFC), i.e. nidhi company;(c) mutual benefit company (MBC), i.e. potentialnidhi company; (d) miscellaneous non-bankingcompany (MNBC), i.e. chit fund company (Table6.1).

Box 6.1: An Overview of Regulation of NBFCs (Concld.)

with the monetary policy framework, so thattheir functioning does not lead to systemicaberrations,

• the quality of surveillance and supervisionexercised by the RBI over the NBFCs keepspace with the developments in this sector.

• comprehensive regulation and supervisionof Asset liability and risk managementsystem for NBFCs,

(2) Amendments to the Reserve Bank ofIndia (RBI) Act, 1934

RBI Act was amended in January 1997providing for, inter alia.

• Entry norms for NBFCs and prohibition ofdeposit acceptance (save to the extentpermitted under the Act) by unincorporatedbodies engaged in financial business,

• Compulsory registration, maintenance ofliquid assets and creation of reserve fund,

• Power of the RBI to issue directions to anNBFC or to the NBFCs in general or to aclass of NBFCs.

• Comprehensive regulation and Supervisionof deposit taking NBFCs and limitedsupervision over those not accepting publicdeposits.

Supervisory framework comprising (a) on-siteinspection (CAMELS pattern) (b) off-sitemonitoring through returns (c) marketintelligence, and (d) exception reports bystatutory auditors,

Punitive action like cancellation of Certificateof Registration (CoR), prohibition fromacceptance of deposits and alienation of assets,filing criminal complaints and winding uppetitions in extreme cases, appointment of theRBI observers in certain cases, etc.

Co-ordination with State Governments to curbunauthorised and fraudulent activities, trainingprogrammes for personnel of NBFCs, StateGovernments and Police officials.

(4) Other steps for protection ofdepositors’ interest

Publicity for depositors’ education andawareness, workshops / seminars for trade andindustry organisations, depositors’ associations,chartered accountants, etc.

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6.2. RegistrationIn terms of the RB1 Act, 1934, registration ofNBFCs with the RBI is mandatory, irrespectiveof whether they hold public deposits or not. Theamended Act (1997) provides an entry pointnorm of Rs. 25 lakh as the minimum net ownedfund (NOF), which has been revised upwards toRs.2 crore for new NBFCs seeking grant of CoR

on or after April 21, 1999. Certain types offinancial companies, viz., insurance companies,housing finance companies, stock brokingcompanies, chit fund companies, companiesnotified as ‘nidhis’ under Section 620A of theCompanies Act, 1956 and companies engagedin merchant banking activities (subject to certainconditions), however, have been exempted from

Table 6.1: Types of Non-Banking Financial Entities (Regulated by RBI)

Non-Banking Financial Entity Principal Business

1. Non-Banking Financial Company In terms of the Section 45-l(f) read with Section 45-i(c) of the RBIAct, 1934, as amended in 1997, their principal business is thatof receiving deposits or that of a financial institution, such aslending, investment in securities, hire purchase finance orequipment leasing.

(a) Equipment leasing company (EL) Equipment leasing or financing of such activity.

(b) Hire purchase finance company (HP) Hire purchase transactions or financing of such transactions.

(c) Investment company (1C) Acquisition of securities. These include Primary Dealers (PDs) whodeal in underwriting and market making for government securities.

(d) Loan company (LC) Providing finance by making loans or advances, or otherwise forany activity other than its own; excludes EL/HP/Housing FinanceCompanies (HFCs).

(e) Residuary non-banking company Company which receives deposits under any scheme or(RNBC) arrangement by whatever name called, in one lump-sum or in

instalments by way of contributions or subscriptions or by sale ofunits or certificates or other instruments, or in any manner. Thesecompanies do not belong to any of the categories as stated above.

II. Mutual Benefit Financial Company Any company which is notified by the Central Government as a(MBFC) i.e., Nidhi Company Nidhi Company under section 620A of the Companies Act, 1956

(1 of 1956)

III. Mutual Benefit Company A company which is working on the lines of a Nidhi company(MBC), i.e., potential Nidhi company but has not yet been so declared by the Central Government,

has minimum net owned fund(NOF) of Rs.10 lakh, has appliedto the RB1 for CoR and also to Department of Company Affairs(DCA) for being notified as Nidhi company and has notcontravened directions/ regulations of RBI/DCA.

IV. Miscellaneous non-banking company Managing, conducting or supervising as a promoter, foreman or(MNBC), Managing, Conducting or agent of any transaction or arrangement by which the companysupervising as a promoter, foreman enters into an agreement with a specified number of subscribersori.e., Chit Fund Company that every one of them shall subscribe a certain sum in

instalments over a definite period and that every one of suchsubscribers shall in turn, as determined by tender or in suchmanner as may be provided for in the arrangement, be entitledto the prize amount.

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the requirement of registration under the RBIAct, as they are regulated by other agencies.Accordingly, as at the end of March 2006, RBIreceived 38214 applications of which 13873 wereapproved and 24134 were rejected. The rest ofthe applications are pending at different stagesof processing. Of the total approvals, only 434companies have been permitted to accept/ holdpublic deposits. Moreover, all NBFCs holdingpublic deposits, whose applications for Certificateof Registration (CoR) have been rejected or CoRshave been cancelled, have to continue repayingthe deposits on due dates and dispose of theirfinancial assets within three years from the dateof rejection of application/ cancellation ofcertificate or convert themselves into non-banking non-financial companies within thesame period.

6.3. Supervision

The RBI has instituted a strong andcomprehensive supervisory mechanism forNBFCs. The focus of the RBI is on prudentialsupervision so as to ensure that NBFCs functionon sound and healthy lines and avoid excessiverisk taking. The RBI has put in place a fourpronged supervisory framework based on:

i. On-site inspection;

ii. Off-site monitoring supported by state-of-the art technology;

iii. Market intelligence; and

iv. Exception reports of statutory auditors ofNBFCs.

The thrust of supervision is based on the assetsize of the NBFC and whether it accepts/ holdsdeposits from the public. The system of on-siteexamination put in place during 1997 isstructured on the basis of assessment andevaluation of CAMELS (Capital, Assets,Management, Earnings, Liquidity, and Systemsand Procedures) approach and the same is akinto the supervisory model adopted by the RBI forthe banking system. Market intelligence systemis also being strengthened as one of the

important tools of supervision. This process ofcontinuous and on-going supervision is expectedto facilitate RBI to pick up warning signals,which can result in triggering supervisory actionpromptly. The returns being submitted by theNBFCs arc reviewed and re-looked at intervalsto widen the scope of information so as toaddress the requirements either for supervisoryobjectives or for furnishing the same to variousinterest groups on the important aspect of theworking of these companies. The companies notholding public deposits arc supervised in alimited manner with companies with asset sizeof Rs.100 crore and above being subjected toannual inspection and other non-public depositcompanies by rotation once in every 5 years.The exception reports, if any, from the auditorsof such companies coupled with adverse marketinformation and the sample check at periodicalintervals are the main tools for monitoring theactivities of such companies vis-à-vis the RBIregulations.

6.4. Policy Developments

The RBI introduced a number of measures toenhance the regulatory and supervisorystandards of this sector, to bring them on parwith commercial banks over a period of time.The regulatory norms, applicable to NBFCs arepresented in Box 6.2. Regulatory measuresadopted during the year aim at aligning theinterest rates in this sector with the ratesprevalent in the rest of the economy, tighteningprudential norms, standardising operatingprocedures and aligning the RBI’s regulationswith the requirements of the amendedCompanies Act.

Directions applicable to NBFCs

The RBI has issued comprehensive depositacceptance and asset side regulations as underfor the NBFCs.

While all the prudential norms are applicable topublic deposit accepting/holding NBFCs only,some of the regulations are applicable to non-deposit accepting companies.

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Box 6.2: Regulatory Norms and Directions for NBFCs A. Important Statutory Provisions ofChapter III B of the RBI Act as applicable to NBFCs

Sr.No. Subject Particulars

1. Certificate of Registration No company, other than those exempted by the RBI, cancommence or ea the business of non-banking financial institutionwithout obtaining a CoR RBI. The pre-requisite for eligibility forsuch a CoR is that the NBFC f have a minimum NOF of Rs. 25lakh (since raised to Rs. 2 crore on and April 21, 1999 for anynew applicant NBFC). The RBI considers grant CoR after satisfyingitself about the company’s compliance with the c enumerated inSection 45-1A of the RBI Act

2. Maintenance of Liquid Assets NBFCs have to invest in unencumbered approved securities,valued at a not exceeding current market price, an amount which,at the close of business on any day, shall not be less than 5.0per cent but not exceeding 25.0 per cent specified by RBI, of thedeposits outstanding at the close of business on the working dayof the second preceding quarter.

3. Creation of Reserve Fund Every non-banking financial company shall create a reserve fundand transfer thereto a sum not less than 20.0 per cent of its netprofit every year as disi in the profit and loss account and beforeany dividend is declared. Such fund to be created by every NBFCirrespective of the fact whether it accepts] deposits or not. Further,no appropriation can be made from the fund ft purpose withoutprior written approval of RBI.

(1) Deposit Acceptance Related Regulations

1 Ceiling on quantum of public Loan and investment companies - 1.5 times of NOF if the companydeposits has NOF of Rs. 25 lakh, minimum investment grade (MIG) credit

rating, complies with all the prudential norms and has CRAR of15 per cent.Equipment leasing and hire purchase financecompanies - if company has NOF of Rs. 25 lakh and complieswith all the prudential norms.

i. with MIG credit rating and 12 per cent CRAR - 4 times ofNOF

ii. without MIG credit rating but CRAR 15 per cent or above -1.5 times of NOF, or Rs. 10 crore, whichever is less.

2 Investment in liquid assets NBFCs - 15 per cent of outstanding public deposit liabilities asat the close of business on the last working day of the secondpreceding quarter, of which

i. not less than 10 per cent in approved securities and

ii. not more than 5 per cent in term deposits with scheduledcommercial banks.

Directions for investments by RNBCs were rationalized in June2004 with a view to reducing the overall systemic risk in thefinancial sector and safeguarding the interest of the depositors.In this regard the following roadmap was prescribed:

a) From the quarter ended June 2005 and onwards, RNBCs werepermitted to invest only to the extent of 10% of the AggregatedLiabilities to Depositors (ALDs) as at the second precedingquarter or one time of their Net Owned Funds, whichever is

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lower, in the manner which in their opinion of the companyis safe as per approval of its Board of Directors.

b) From the quarter ended June 2006 onwards, this limit wouldstand abolished and RNBCs would not be permitted to investany amount out of ALDs as per their discretion. However, toavoid strain, in complying with 100% directed investmentsby companies, the same had been modified to 95% of ALDup to March 31, 2007 and 100% of ALD thereafter. Theseliquid asset securities are required to be lodged with one ofthe scheduled commercial banks or Stock Holding Corporationof India Ltd.. or a depository or its participant (registeredwith SEB1).Effective October 1, 2002, government securitiesare to be necessarily held by NBFCs either in Constituent’sSubsidiary General Ledger Account with a scheduledcommereial bank or in a demat account with a depositoryparticipant registered with SEBI.These securities cannot bewithdrawn or otherwise dealt with for any purpose other thanrepayment of public deposits.

3 Period of Deposits No demand depositsNBFCs – 12 to 60 monthsRNBCs – 12 to 84 monthsMNBCs (chit Funds) – 6 to 36 months

4 Ceiling of deposit rate NBFCs, MNBCs and Nidhis - 11.0 per cent per annum (effectiveMarch 4,2003)RNBCs - Minimum interest of 4.0 per cent on daily deposits and6.0 per cent on other than daily deposits.Interest may be paid orcompounded at periods not shorter than monthly rests.

5 Advertisement methodology for Every company which accepts deposits by advertisement has toacceptance of deposits/public comply with the advertisement rules prescribed in this regard,deposits the deposit acceptance form should contain certain prescribed

information ,issue receipt for deposits and maintain a depositregister. etc.

6 Submission of returns All NBFCs holding or accepting public deposits have to submitperiodical returns to RBI at Quarterly, half yearly and annualintervals.

(2) Prudential Norms applicable to only those NBFCs which are accepting/holding public deposits

1 Capital to Risk Assets Ratio The NBFCs holding/accepting public deposits are required to(CRAR) maintain CRAR as under:

i. Equipment leasing companies/hire purchase financecompanies (with MIG credit rating) 12 percent

ii. Equipment leasing companies/hire purchase financecompanies (without MIG credit rating) 15 percent

iii. Loan/investment companies 15 percent

iv. RNBCs 12 per cent

CRAR comprises – tier I and tier II capitalTo be maintained on adaily basis and not merely on the reporting dates.Tier I Capital –core capital or NOF but includes compulsorily convertiblepreference shares (CCPS) as a special case for CRAR purposes.TierII Capital – all quasi-capital like preference shares (other thanCCPS) subordinated debt, convertible debentures, etc.Tier III

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Capital not to exceed tier I capitalGeneral provisions and lossreserves not to exceed 1.25 per cent of the risk – weightedassets.Subordinated debt issued with original tenor of 60 monthsor more.

2 Restrictive norms Acceptance of public deposits not allowed if the prudential normsare not complied with fully.

Any NBFC defaulting in repayment of the matured depositsprohibited from creating any further assets until the defaults arerectified

Investments in real estate, except for own use, restricted to 10per cent of the owned fund.Investments in unquoted sharesrestricted as under:EL/HP Companies 10 percent of owned

fund

Loan/investment companies 20 per cent of ownedfund

No further investments in real estate or unquoted shares in caseof excess position held till its regularisation.

Sufficient adjustment period allowed - further extension on meritsof each case.

3 Credit/investment concentration Single borrower exposure limits credit - 15 percent of ownednorms fund

Investments - 15 percent of ownedfund

Single group of borrower exposure 25 percent of ownedlimits credit - fund

Composite (credit and investments) exposure limits

Single borrower 25 percent of ownedfund

Single group of borrowers 40 percent of ownedfund

� Exposure norms also applicable to own group companies andsubsidiaries.

� Includes all forms of credit and credit related and certainother receivables as also off balance sheet exposures.

� Debentures/bonds to be treated as credit for the purpose ofprudential norms but as investments for the purpose ofbalance sheet and compliance with investment obligations.

4 Reporting System: Half yearly Half-yearly returns to be submitted as at the end of March andreturn September every year,

� Time allowed for submission - 3 months from the due date,

� The return to be certified by the statutory auditors of thecompany. However, it need not wait for audit and the figuresfurnished therein could be the unaudited figures but mustbe certified by auditors

(3) Prudential Norms applicable to all NBFCs irrespective of whether they accept/hold public deposits or not

1 Income Recognition Norms The recognition of income on the NPA is allowed on cash basis only.Theunrealised income recognised earlier is required to be reversed.

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2 NPA norms Recognition of income on accrual basis before the asset becomesNPA as under:Loans and Advances: Upto 6 months and 30 dayspast due period (past due period done away with effect from March31, 2003) Lease and Hire Purchase Finance: 12 months

3 Restrictive Norms Loans against own shares not allowed

4 Policy on demand/call loans Companies to frame a policy for demand and call loans relatingto cut-off date for recalling the loans, the rate of interest,periodicity of such interest, periodical reviews of such performance,etc.

5 Accounting Standards All the Accounting Standards and Guidance Notes issued byInstitute of Chartered Accountants of India (ICAl) are applicableto all NBFCs in so far as They are not inconsistent with theguidelines of RBI.

6 Accounting for investments All NBFCs to have a well defined investment policy.

Investments classified into two categories - (1) long term and (ii)current investments.

Long term investments to be valued as per Accounting Standard,issued by ICAI.

Current investments to be classified into - (a) quoted and (b)unquoted.

Current quoted investments to be valued at lower of cost or marketvalue.

Block valuation permitted - Notional gains or losses within theblock permitted to be netted - but not inter-block, net notionalgains to be ignored but notional losses to be provided for.

Valuation norms for current unquoted investments are as under:

i. Equity shares (at lower of cost or break up value or fair value)

ii. Re I/- for the entire block of holding if the balance sheet ofthe investee company is not available for the last two years

iii. Preference shares at lower of cost or face value

iv. Government securities at carrying cost

v. Mutual Fund units at net asset value (NAV) for each schemeand

vi. Commercial paper (CP) at its carrying cost

7 Asset Classification All forms of credit (including receivables) to be classified into fourcategories -

� Standard asset

� Sub-standard asset

� Doubtful asset

� Loss asset

8 Provisioning for Non-Performing Standard assets - No provisionSub-Assets – Loans and Advances standard assets- 10 per cent of outstanding balance

Doubtful assets - on unsecured portion 100 per cent and onsecured portion 20, 30 and 50 per cent depending on the age ofthe doubtful assets

Loss asset - 100 per cent of the outstanding

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9 Provisioning for Non-Performing � Unsecured portion to be fully provided forAssets – Equipment Lease and � Further provisions on net book value (NBV) of EL/HP assetsHire Purchase accounts � Accelerated additional provisions against NPAsNPA for 12

months or more but less than 24 months 10 per cent ofNBVNPA for 24 months or more but less than 36 months 40per cent of NBVNPA for 36 months or more but less than 48months 70 per cent of NBVNPA for 48 months or more 100per cent of NBVValue of any other security considered onlyagainst additional provisions.Rescheduling in any manner willnot upgrade the asset upto 12 months of satisfactoryperformance under the new terms.Repossessed assets to betreated in the same category of NPA or own assets - optionlies with the company.

10 Risk – Weights and Credit � Risk - weights to be applied to all assets except intangibleConversion factors assets.

� Risk - weights to be applied after netting off the provisionsheld against relative assets.

� Risk - weights are 0, 20 and 100.

� Assets deducted from owned fund like exposure to subsidiariesor companies in the same group or intangibles to be assigned0 per cent risk - weight.

� Exposures to all-India financial institutions (AIFIs) at 20 percent risk -weight and all other assets to attract 100 per centrisk - weights.

� Off-balance sheet items to be factored at 50 or 100 and thenconverted for risk - weight.

11 Disclosure requirements 1. Every NBFC is required to separately disclose in its balancesheet the provisions made as outlined above without nettingthem from the income or against the value of assets.

2. The provisions shall be distinctly indicated under separateheads of accounts as under:

i. provisions for bad and doubtful assets; and

ii. provisions for depreciation in investments.

3. Such provisions shall not be appropriated from the generalprovisions and loss reserves held, if any, by the NBFC.

4. Such provisions for each year shall be debited to the profitand loss account. The excess of provisions, if any, held underthe heads general provisions and loss reserves may be writtenback without making adjustment against them.

5. Nidhis and Chit Fund companies exempted.

6.5 Interest Rates

Keeping in view interest rates prevalent in thefinancial sector, the ceiling on interest rates ondeposits payable by NBFCs, including chit fundcompanies and nidhi companies, was reducedfrom 16 per cent per annum to 14 per cent perannum effective April 1, 2001 and further to 12.5per cent per annum effective November 1, 2001and further to 11% effective from March 2003.

6.6. Classification of NBFCs as EquipmentLeasing and Hire Purchase FinanceCompanies

In response to representations from NBFCs, itwas decided to include loans and advancesagainst hypothecation of automobiles, aircraftsand ships registered with the specifiedauthorities in the aggregate of equipment leasingand hire purchase assets for the purpose of

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classification of an NBFC into equipment leasingand hire purchase finance company.

6.7. Alignment of the RBI’s Regulationswith Companies (Amendment)Act, 2000

Changes were effected in the RBI directions toNBFCs to align with those contained in theCompanies Act, 1956, as amended by theCompanies (Amendment) Act, 2000. Accordingly,all NBFCs were advised to report to the CompanyLaw Board the defaults, if any, in repayment ofmatured deposits or payment of interest to smalldepositors within 60 days of such default. Inaddition to NBFCs with asset size of Rs.50 croreand more, those with paid up capital of not lessthan Rs.5 crore have to constitute AuditCommittees. Such committees would have thesame powers, functions and duties as laid downin Companies Act, 1956. Moreover, some NBFCs,which were hitherto private limited companiesholding public deposits, have now become publiclimited companies under the Companies Act.Such NBFCs have to approach the RBI afterobtaining a fresh certificate of incorporation fromthe Registrar of Companies, for change of namein the CoR to reflect their status as public limitedcompanies.

6.8. Liquid Asset Securities of NBFCs

Effective from October 1, 2002, all NBFCs shouldnecessarily hold their investments in governmentsecurities either in Constituent’s SubsidiaryGeneral Ledger Account (CSGL) with a scheduledcommercial bank or Stock Holding Corporationof India Ltd. (SHCIL) or in a dematerialisedaccount with depositories [National SecuritiesDepository Ltd. (NSDL)/ Central DepositoryServices (India) Ltd. (CDSL)] through a depositoryparticipant registered with SEBI. The facility ofholding government securities in physical form,therefore, stands withdrawn. Governmentguaranteed bonds, which have not beendematerialised may be kept in physical form tillsuch time these are dematerialised. Only oneCSGL or a dematerialised account can be openedby any NBFC. In case the CSGL account isopened with a scheduled commercial bank, theaccount holder has to open a designated fundsaccount (for all CSGL related transactions) with

the same bank. In case the CSGL account isopened with any of the non-banking institutionsindicated above, the particulars of the designatedfunds account (with a bank) should be intimatedto that institution. The NBFCs maintaining theCSGL/designated funds accounts will be requiredto ensure availability of clear funds in thedesignated funds accounts for purchases and ofsufficient securities in the CSGL account forsales before putting through the transaction. Nofurther transactions in government securitiesshould be undertaken by NBFCs with any brokerin physical form with immediate effect. All furthertransactions of purchase and sale of governmentsecurities have to be compulsorily throughCSGL/demat account. Government securitiesheld in physical form were to be dematerialisedby October 31, 2002.

6.9. Accounting Standards

In terms of Accounting Standard (AS) 19(Accounting for Leases) issued by the Instituteof Chartered Accountants of India (ICAI), it wasclarified that (i) the prudential norms applicableto hire purchase assets would, mutatis mutandis,be applicable to the financial leases written onor after April 1, 2001 and (ii) the leases writtenup to March 31, 2001 would continue to begoverned by the prudential norms relating toleased assets, as hitherto.

6.10. Statutory Auditors

NBFCs have to reiterate in their letter ofappointment to statutory auditors their statutoryresponsibility to report directly to the RBI theviolations, if any, of the provisions of the RBIAct or Directions issued thereunder, noticed bythem in the course of their audit.

6.11. Prudential Regulation

Some NBFCs were granting demand/call loanswith an open period or without any stipulationregarding the rate of interest and servicing,resulting in problems of compliance withprudential norms relating to income recognition,asset classification and provisioning in respectof such loans. Accordingly, guidelines wereissued to obviate such difficulties and to ensurethat all such loans are appropriately classifiedand the position of NPAs are truly reflected inthe financial statements of NBFCs. The concept

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of ‘past due’ would be done away with in respectof the definition of NPA for NBFCs effective fromMarch 31, 2003, which would be reflected inthe half-yearly return on prudential norms andthe balance sheet as on March 31, 2003. Interms of NBFCs Directions on Prudential Norms,the NBFCs accepting/holding public depositshave to ensure maintenance of minimumprescribed capital to risk-weighted assets ratio(CRAR) at all times. The format for the report ofthe auditors has accordingly been amended. Inorder to obviate the probability of applyingdivergent yardsticks for identification of potentialthreat of non-recoverability of loans, RBI hasprescribed objective criteria for classification ofassets as loss assets.

6.12. Submission of Returns by NBFCs

Several NBFCs have been lax in timelysubmission of the returns to the RBI. Action hasbeen contemplated against such NBFCs - initiallythose with public deposits of Rs.50 crore andabove - for non-submission of returns. The actionmay include imposing penalties as provided inthe RBI Act, 1934 as also launching court

proceedings against the errant companies,besides considering rejection/ cancellation of theCoR. A list of returns submitted by NBFCs ispresented in Annex 6.1.

6.13. Protection of Depositors’ Interest

With a view to protecting the interest ofdepositors, it was decided to issue pressadvertisements in cases where winding uppetitions filed by the RBI have been admitted inCourt and provisional liquidators have beenappointed or where criminal complaints havebeen filed by the RBI and summons have beenissued by the Court.

6.14. Asset Liability Management

Based on the guidelines issued in July 2001,effective March 31, 2002 asset liabilitymanagement system in all NBFCs with publicdeposits of Rs. 20 crore and above as also NBFCswith asset size of Rs. 100 crore and above hasbeen made operational. Instructions were alsoissued to the effect that the first return as onSeptember 30, 2002, should be submitted bythe NBFCs to the RBI latest by October 31, 2002.

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Annex 6.1: Details of Returns Being Received By DNBS as on January 31, 2007

Srl Name of the Return ShortFrequency

ReferencePurpose

Who are supposed toName Dates file the return

1 Annual Returns By NBS 1 Yearly 31-March Details of Assets And NBFCs-D/MNBCsNBFCs/MNBCs Liabilities

1 Annual Returns By RNBCs NBS 1A Yearly 31-March Details of Assets And RNBCsLiabilities

2 Half-Yearly Statement of NBS 2 Half Yearly 31 March, Capital Funds, Risk NBFCs-D and RNBCsetc By NBFCs and RNBCs 30 Assets, Asset

September Classification etc

3 Quarterly Return on NBS 3 Quarterly 31 March, Statutory Liquid Assets NBFCs-DStatutory Liquid Assets 30-June, 30-of NBFCs September,

31 December

3 Quarterly Return on NBS 3A Quarterly 31 March, Statutory Liquid Assets RNBCsStatutory Liquid Assets of 30-June,RNBCs 30-September,

31 December

4 Monthly Return on NBS 4 Monthly Month-end Details of Public Deposits, NBFCs holding publicRepayment of Deposits Other Liabilities, Liquid deposits whose

Assets, Other Assets applicationfor Certificateof Registration underSection 45-IA of RBI Act,1934 have been rejected

5 Monetary and Supervisory NBS 5 Quarterly 31 March, Components of Assets, NBFCs-D and RNBCsReturn 30-June, Liabilities, Interest Rates, holding Public Deposits

30-September, Cash Inflow/Outflow etc. of Rs.20 crore and above31 December as per the last balance

sheet.

6 Monthly Return on Capital NBS 6 Monthly Month-end Details of Capital Market NBFCs-D holding publicMarket Exposure Exposure deposits of Rs.50 crore or

above and RNBCs havingaggregate liabilities to thedepositors of Rs. 50 croreand above.

7 Monthly Return on Monthly Month-end Sources and Application NBFCs-ND having asset-Important Financial of Funds, Profit and Loss size of Rs.100 crore andParameters of NBFCs not Account, Asset above.accepting/holding public Classification, Bank’s/Fisdeposits and having asset exposure on the company,size of Rs.100 crore Details of Capital Marketand above Exposure etc.

8 Asset-Liability Management Half Yearly 31 March, 30 Structural Liquidity, All NBFCs having Asset(ALM) Return September Short-term dynamic Size of Rs.100 crore and

liquidity, Interest Rate above and/or Publicsensitivity etc. Deposits of Rs.20 crore

and above.

Note: NBFCs-D -> Deposit taking Non-Banking Financial Companies (NBFCs); MNBC -> Miscellaneous Non-Banking Company; RNBC-> Residuary Non-Banking Company; NBFCs-ND -> Non-Deposit taking NBFCs.

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7.1. Introduction

The market for government securities is theoldest and most dominant in terms of marketcapitalisation, outstanding securities, tradingvolume and number of participants. It not onlyprovides resources to the government for meetingits short term and long term needs, but alsosets benchmark for pricing corporate paper ofvarying maturities and is used by RBI as aninstrument of monetary policy. The instrumentsin this segment are fixed coupon bonds,commonly referred to as dated securities,treasury bills, floating rate bonds, zero couponbonds and inflation index bonds. Both Centraland State government securities comprise thissegment of the debt market.

Reserve Bank of India (RBI) administers andmanages the Public Debt Operations of thecountry and conducts the issue and servicing ofnew loans of the Central and State Governments,primarily Dated Securities, through its PublicDebt Offices (PDO). To accomplish the task ofadministration and management of internal debt,RBI had a decentralized system of operationsthrough 15 Public Debt Offices established at14 centres. With the computerization of PublicDebt Office-cum-Negotiated Dealing System(PDO-NDS), the PDO system now operates asan integrated virtual centralized system.

The key data relevant to the governmentsecurities market are captured under variousdata system, compiled and published in theBank’s publications following standarddefinitions, classifications, timeliness and relatedguidelines conforming to international standardslike IMF’s Data Dissemination Standards.

7.1.1. Purpose

Purpose of the document is to provideinformation in the form of a handbook on thekey particulars about the data relating to theGovernment Securities Market that are publishedregularly in the Bank’s Publications. Thedocument aims to provide the basic information

7. STATISTICS ON GOVERNMENT SECURITIES MARKET

on the methodological framework covering thedetails of the basic information system,definitions and measurements, working processeslike data capture, compilation and dissemination.

7.1.2. Scope

This document provides the user with guidelinesrelating to the Published Data in the Bank’sPublications. This will facilitate betterunderstanding, documentation, work-continuity,standardization and historical perspective.

The document is organized as follows: Section7.2 contains an analytical perspective outliningthe significance of the area, measurement needsand key parameters or indicators determiningthe contours of the data system. Section 7.3describes the concepts, definitions andclassificatory methods for the different kind ofdata published in various statistics brought outby RBI. Section 7.4 gives a description of thesources and systems used in capturing relateddata. Section 7.5 contains the list of the Bank’spublications containing similar kind of data sets.A detailed glossary of terms used in variousstatistical tables as also form and content of eachtable are appended as ready reckoner.

7.2. Analytical Perspective

The Government Securities (G-Sec) market is theoldest and the largest component of the IndianDebt Market in terms of market capitalization,outstanding securities and trading volumes. TheReserve Bank of India manages public debt andissues Indian currency denominated loans onbehalf of the central and the state governmentsunder the powers derived from the Reserve Bankof India Act. The RBI is the debt manager forboth the Central Government and the StateGovernments. It is also the regulator ofGovernment securities market. The Public DebtAct, 1944, provides the framework under whichgovernment securities are issued and serviced.Under the RBI Act, 1934, RBI is the manager ofCentral Government debt by statute. RBI

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Statistics on Government Securities Market

manages the debt of state governments on thebasis of separate agreements. External debt ofthe Government is managed by the Ministry ofFinance. As a debt manager for the both Centraland State Governments, RBI in consultation withthe Government, manages the maturity profile,timing of issue, composition of debt and the typeof instruments issued. Operationally, RBI dealswith the issue, servicing and repayment ofgovernment debt.

Public Debt management is the process offormulating and executing a strategy formanaging the government’s debt to raise therequired amount of funding, within the ambit ofcost/risk objectives. Public Debt managementalso encompasses other functions such as cashand liquidity management of Central and Stategovernments as also the development of a liquidand deep market for government securities whichwill facilitate the cost reductions of public debt.

The framework of Government securities marketbestows the central bank a very useful tool forconducting of Open Market Operations (OMO)and a backing for its role as note issuingauthority. Government security based activitiescarried out by the RBI involve (a) auctioning thegovernment debt from time to time, (b)introduction of new instruments, smootheningthe maturity structure of debt, placing of debtat market related rates and improving depth andliquidity of government securities market bydeveloping an active secondary market for them,(c) liquidity operations as and when requiredthrough various instruments, such as, OpenMarket Operations, Repos and Reverse Reposand issuing MSS bonds.

Historically, the GOI rupee securities used tocomprise (i) dated securities of different maturityperiods issued by the Central Government inrespect of public loans, (ii) Treasury Bills and(iii) ad hoc treasury bills. Under Section 33(1) ofthe RBI Act, 1934, GOI securities form one ofthe main assets of the Issue Department of theBank.

The analytical perspective of the data systemrelating to the G-sec market relevant to the Bankis based on the data framework of the WeeklyStatistical Supplement (WSS) to the RBI Bulletin.

It may be mentioned that the genesis of thevarious Tables published in the WSS is basedon the Weekly Statement of Affairs of Issue andBanking Departments of RBI. The specific formatof various Tables are in accordance with Section53 (1) of the RBI Act, 1934 and any majorchange is effected with the concurrence of theBank as also the Central Government, as andwhen necessary.

7.2.1. Developments and Measurementneeds of the area

Prior to the nineties, G-sec market was virtuallynot visible as it used to operate under severecontrols on pricing of assets, segmentation ofmarkets and barriers to entry, low levels ofliquidity, limited number of players, near lackof transparency, and high transactions cost.Financial reforms have significantly changed theIndian debt markets for the better. Most debtinstruments are now priced freely in the markets;trading mechanisms have been altered to providefor higher levels of transparency, higher liquidity,and lower transactions costs; new participantshave entered the markets, broad basing the typesof players in the markets; methods of securityissuance, and innovation in the structure ofinstruments have taken place; and there hasbeen a significant improvement in thedissemination of market information.

The Nineties have seen significant policy reformsin the government securities (G-sec) market. Theearly nineties saw the introduction of auction-based price determination for governmentborrowings; development of appropriateinstruments and mechanisms for the borrowingprogramme; a significant increase in informationdissemination on market borrowings andsecondary market transactions; and thedevelopment of the RBI’s yield curve for markingthe G-sec portfolios of banks to the market. Inthe mid-nineties, RBI introduced the system ofprimary dealers; the National Stock Exchangewas created as the first formal mechanism fortrading on G-sec; Delivery versus Payment (DVP)was introduced in securities settlement; numberof players in the G-sec markets was increasedwith the facility for non-competitive bidding inauctions, constituent SGL (Subsidiary General

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Ledger) accounts and the setting up of gilt funds;and Repos re-emerged as important instrumentsof short term liquidity-management.

The late nineties have seen the emergence ofmarket based liquidity arrangement through theLiquidity Adjustment Facility (LAF); expansion ofthe repo markets; growth in the number andvolume of secondary market transactions in G-sec; the creation of a market yield curve; thecomplete stoppage of automatic monetisation ofdeficits; the creation of on-going reviewmechanisms such as the Monitoring Group onCash and Debt Management of GOI; and theemergence of self regulating industry bodies suchas the Primary Dealers Association of India(PDAI) and the Fixed Income Money Markets andDerivatives Association (FIMMDA).

Internal Debt Management by the Bank receiveda focused attention from April, 1992.Management of the public debt of the CentralGovernment is an obligation cast on the Bankunder Section 20 of the Reserve Bank of IndiaAct, 1934. The work relating to Policy, planningand execution of the Market BorrowingProgramme of Central Government, issuances ofGovernment of India Treasury Bills of varyingmaturity were made focussed and transparent.The State Finances activity was also brought intoa clear focus so as to attend the work ofplanning and execution of the Market BorrowingProgram of the State Governments in a timelyand orderly manner. This includes advising theMarket Borrowing Programme to respective StateGovernments on receipt of the details from theMinistry of Finance, attending to the pre-floatation arrangements including convening ofState Finance Secretary’s meeting. The presentobjectives of the Debt Management Operationsof the Bank can be summarized as under:

� Undertake debt and cash managementoperations for the Central and StateGovernments with the objective of minimisingthe cost of Government borrowing over a longperiod consistent with the objective of themonetary policy.

� Develop a deep and liquid GovernmentSecurities Market.

� Regulate the government securities market.

� Improve the transmission mechanism formonetary policy and facilitate the use ofindirect instruments of monetary policy.

� Develop a yield curve across maturities soas to provide benchmarks for developmentof debt markets.

� Facilitate the development of hedgingproducts to manage liquidity and marketrisk.

7.3. Concept, Definition and Classification

7.3.1. Liquidity Adjustment Facility (LAF) –Repo and Reverse Repo

The LAF is intended to primarily meet the day-to-day liquidity mismatches in the system, andis not intended to meet the financingrequirements of eligible institutions. The schemeof Liquidity Adjustment Facility (LAF) wasintroduced from June 5, 2000. Under the schemeRepo auctions (for absorption of liquidity) andReverse Repo auctions ( for injection of liquidity)were introduced on a daily basis (exceptSaturdays). But for the intervening holidays andFridays, the tenor of the Repo was one day. OnFridays, the auction was conducted for threedays. The Repo auction was conducted on“Uniform price” basis initially and thereafter itwas conducted on “Multiple price” basis. Interestrate in respect of both Repo and Reverse Repowas based on the bids quoted by participantsand subject to the cut-off rates as decided bythe RBI at Mumbai. In addition to the overnightRepo, RBI had the discretion to conduct Repoup to 14 days. All scheduled commercial banks(excluding RRBs) and Primary Dealers havingcurrent account and SGL account with RBI,Mumbai, are eligible to participate in the Repoand Reverse Repo auctions under LAF.

RBI introduced the Liquidity Adjustment Facility– Revised Scheme with effect from March 29,2004 taking into account the recommendationsof the Internal Group on Liquidity AdjustmentFacility and suggestions from the marketparticipants and experts. The features of theRevised Scheme were as under (Table 7.1):

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Table 7.1: Features of the Revised Liquidity Adjustment Facility Scheme

1 Tenor-Repo Tenor- Reverse Repo 7 days fixed rate repo conducted daily (1 day repo fromNovember 1, 2004)1 day overnight fixed rate ReverseRepo on week days only

2 Option RBI retains the option to conduct overnight repo orlonger term repo at fixed rate or variable rates dependingon market conditionsRBI will have the discretion tochange the spread between repo and reverse repo

3 Participants Scheduled commercial banks (excluding RRBs) andPrimary dealers having current account and SGL accountwith RBI

4 Repo Rate 4.50% (Monetary Policy review-October, 2004 raised theRepo rate to 4.75%) @

5 Reverse Repo rate 150 basis points above Repo rate. (Monetary PolicyReview – October, 2004 reduced the spread to 125 basispoints) @Therefore, Reverse repo rate is 4.75% + 1.25% = 6.00%

6 Bidding The bids will be submitted electronically through NDSCut off time for submission of bids is 10.30 AM – Auctionresult will be announced by 12.00 Noon

7 Bid size Minimum Rs. 5 crore and multiple of Rs. 5 crore

8 Eligible securities All SLR eligible transferable Government of India datedsecurities/Treasury bills

9 Type Repo will be conducted as “Hold-in-custody” type whereinthe RBI will act as custodian for the participants andhold the securities on their behalf in the Repo/Reverserepo Constituents’ Accounts

@ Repo and Reverse Repo rates are revised by RBI from time to time.

RBI receives the bids for LAF in the morning.The Financial Market Committee meets daily at12.00 noon to assess the bids. The actualamount of liquidity to be absorbed or injectedinto the system is determined by the RBI aftertaking into account the liquidity conditions inthe market, the interest rate situation and thestance of policy. The rate of interest depends onthe quotes received in the bids. RBI has alsorejected all bids in the repo auctions, on fewoccasions.

In the Monetary Policy Review, October, 2004,the Repo rate has been raised from 4.50% to4.75% and the spread between Repo rate and

Reverse Repo rate has been reduced from 150basis points to 125 basis points. Accordingly,the Repo rate and reverse repo rate was 4.75%and 6.00%, respectively.

With effect from November 1, 2004, LiquidityAdjustment Facility scheme being operated withovernight fixed rate repo and reverse repo.Accordingly, auctions of 7-day and 14-day repowere discontinued from November 1, 2004. TheReserve Bank continues to have the discretionto conduct overnight/longer term repo/reverserepo auctions at fixed rate or at variable ratesdepending upon market conditions and otherfactors.

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Some of the recent policy changes that impactthe data definitions are as follows:

� A policy decision was made to adopt theinternational usage of the term “Repo” and“Reverse Repo” under LAF operations.Effective from October 29, 2004, the term“Repo” is being used for the LAF operationswhere Reserve Bank of India would injectliquidity to the Banking system (earliertermed as Reverse Repo).

� To fine-tune the management of liquidity, itwas decided to introduce a second LAF(SLAF) from November 28, 2005. SLAF willbe conducted between 3.00 P.M. and 3.45P.M. The spread between the reverse reporate and the repo rate is 100 basis points.

Daily data on the LAF operations are publishedin the specific format. The format of the dataalong with explanatory notes is given in theAnnex-7.1.

7.3.2. Treasury Bills

Treasury bills are short-term debt instrumentsissued by the Central government. Treasury billsplay a vital role in cash management of theGovernment. Being risk-free, their yields atvaried maturities serve as short termbenchmarks and help pricing varied floating rateproducts in the market.

Until 1988, the only kind of Treasury bill thatwas available was the 91-day bill, issued on tap;at a fixed rate of 4.5% (the rates on these billsremained unchanged at 4.5% since 1974). 182-day T-bills were introduced in 1987, and theauction process for T-bills was started. 364 dayT-bill was introduced in April 1992, and in July1997, the 14-day T-bill was also introduced. RBIhad suspended the issue of 182-day T- bills fromApril 1992, and revived their issuance since May1999. All T-bills are now sold through an auctionprocess according to a fixed auction calendar,announced by the RBI. Ad-hoc treasury bills,which enabled the automatic monetisation ofcentral government budget deficits, have beeneliminated in 1997. All T-bill issuances nowrepresent market borrowings of the centralgovernment.

91 days Treasury bill on tap: Before, 1960s the91 days Treasury bills were sold on auctionbasis. Subsequently, these T-Bills were replacedby Tap sale of T-bills since mid-1960s. The tapbill rates varied consistently with changes in theBank Rate till 1974 and thereafter the discountrate on tap bill was fixed at 4.6%

Other maturities of T-bills: 182 days T-bills wereintroduced in November, 1986 on auction basis.The 182 days T-bills were replaced byintroduction of 364 days T-bills on fortnightlyauction basis since April, 1992. Subsequently,91 days T-bills were introduced on auction basisin January, 1993. When the ad-hoc T-bills werediscontinued in April, 1997, to enable finer cashmanagement of the government and to provideavenue for state governments and some foreigncentral banks to invest surplus funds, 14-daysT-bills were introduced in April, 1997.Subsequently, the 14 days T-bills and 182 daysT-Bills were discontinued. Currently, 91 days T-Bills, 182 days T-Bills and 364 days T-Bills aresold on auction basis. Table 7.2 gives achronology of treasury bills of various maturitiesintroduced and discontinued subsequently.

Table 7.2: Treasury Bills – Chronology ofDevelopments

Type of T-Bill Introduced Discontinued

91 days T-Bill on Before Mid-1950sweekly auction 1950s

91 days Ad-hoc T-Bill Mid 1950s April, 1997

91 days T-Bill on Tap Mid 1950s March, 1997

182 days T-Bill on November, April, 1992weekly auction 1986

14 days T-Bill on April, 1997 May, 2001weekly auction

364 days T-Bill on April, 1992fortnightly auction

91 days T-Bill on January,weekly auction 1993

182 days T-Bill on Re-intro- May,weekly auction duced in 2001

June, 1999

182 days T-Bill on Re-intro-weekly auction duced in

April, 2005

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As will be seen from the above table that atpresent 91 days T-Bills are sold on weekly and182 days Treasury Bills and 364 days TreasuryBills are sold on fortnightly basis. The auctionof 91 days T-Bills are conducted everyWednesday with the notified amount of Rs. 500crores and the auction of 182 days T-Bills, and364 days T-Bills are conducted every alternateWednesday with the notified amount of Rs. 500crores and Rs. 1000 crores, respectively. Theinvestors in Treasury bills are banks, primarydealers, State governments, Provident funds,financial institutions, Insurance companies,NBFCs, Foreign Institutional Investors and Non-Resident Indians.

Weekly data on the Treasury Bills auctionsummary are published in a specific format. Theformat of the data along with explanatory notesis given in the Annex-7.2.

7.3.3 Government Security

“Government security” means a security createdand issued by the Government for the purposeof raising a public loan or for any other purposeas may be notified by the Government in theOfficial Gazette and having one of the formsmentioned in The Public Debt Act, 1944.

A Government security may, subject to suchterms and conditions as may be specified, be insuch forms as may be prescribed or in one ofthe following forms, namely: (i) a Governmentpromissory note payable to or to the order of acertain persons; or (ii) a bearer, bond payableto bearer; or (iii) a stock; or (iv) a bond held ina bond ledger account.

The Central government raises resources in thedebt markets, through market borrowings, pre-dominantly to fund the fiscal deficit. Marketborrowings, which funded about 18% of thegross fiscal deficits in 1990-91, constituted68.64% of the gross fiscal deficit in 2000-01,and have emerged as the dominant source offunding of the deficit. The abolition of theautomatic monetisation of deficit in 1997 hasled to significant increases in market borrowingsof the government. The State government bondissuance is presently managed by the RBI along

with the central borrowings. A part of statedeficits are funded through market borrowingsby the RBI.

The issuance process for G-sec has undergonesignificant changes in the 1990s, with theintroduction of the auction mechanism, and thebroad basing of participation in the auctionsthrough creation of the system of primary dealersand the introduction of non-competitive bids. RBIannounces the auction of government securitiesthrough a press notification, and invites bids.The sealed bids (bids received electronically aswell as physically) are opened at an appointedtime, and the allotment is based on the cut-offprice decided by the RBI. Successful bidders arethose that bid at a higher price, exhausting theaccepted amount at the cut-off price.

The design of treasury auctions is an importantissue in government borrowing.

The objectives of auction design are:

� Enabling higher auction volumes that satisfythe target borrowing requirement, withoutrecourse to underwriting and/or devolvement;

� Broadening participation to ensure that bidsare not concentrated or skewed; and

� Ensuring efficiency through achieving theoptimal (lowest possible) cost of borrowingfor the government.

The two choices in treasury auctions, which arewidely known and used, are (a) DiscriminatoryPrice Auctions (French Auction) and (b) UniformPrice Auctions (Dutch Auction). In both thesekinds of auctions, the winning bids are thosethat exhaust the amount on offer, beginning atthe highest quoted price (or lowest quoted yield).However, in a uniform price auction, allsuccessful bidders pay a uniform price, whichis usually the cut-off price (yield). In the case ofthe discriminatory price auction, all successfulbidders pay the actual price (yield) they bid for.

The RBI has the discretion to reject bids whenthe rates at which bids are received are higherthan the rates at which RBI wants to place thedebt. Depending on the pricing objective RBIwants to achieve and the bidding pattern of

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participants, bidding success and devolvementtakes place.

Non-competitive bids can also be submitted intreasury auctions by specified institutions.Allotments to these bids will be first made fromthe notified amount, at the weighted averageprice of all successful bids.

Some of the key terms used in the primaryissuance of dated security are as under (cf.Glossary in Annex – 7.5 for other terms)

Yield corresponding to each transaction in asecurity is calculated from the following Yield toMaturity (YTM) and price relationship:

Where,

P = price of the bond

bpi = broken period interest

c = annual coupon payment

y = yield to maturity

v = number of coupon payments in a year

n = number of coupon payments till maturity

F = Redemption payment of the bond

t i = time period in year till i th coupon payment

Quarterly data on the primary issuances of datedsecurities are published in the RBI Bulletin asper pre-designed format. The format of the dataalong with explanatory notes is given in theAnnex-7.3.

7.3.4. Secondary Markets for GovernmentSecurities

In the secondary market, outstanding securitiesare traded. This term differentiates from theprimary or initial market when securities are soldfor the first time. Secondary market refers to

the buying and selling that goes on after theinitial public sale of the security.

Government securities are deemed to be listedas soon as they are issued. Markets forgovernment securities are pre-dominantlywholesale markets, with trades done on NDS asalso NDS-OM trading platform. Since mostinstitutional participants have to report theirtrades to the PDO, and effect settlement throughthe SGL, RBI’s reports on SGL transactionsprovide summary data on secondary markettransactions in government securities.Introduction of NDS has provided certainty tomarket participants in respect of demand forsettlement funds for securities transactions onthe day of settlement, leading to improved cashand liquidity management among the marketparticipants.

Apart from banks, provident funds andinsurance companies are large holders ofgovernment bonds, buying them to comply withprudential norms governing their portfolios.These institutions hold about 20% of outstandingG-secs. However, the fact that provident fundsare not actively managed portfolios, and do notmark their portfolios to market, makes themlarge dormant holders of government bonds.

Primary Dealers hold government bonds eitherdue to devolvement or underwritingcommitments, or to enable repo transactions andmarket making. They are market participantswho turn over their portfolios very rapidly, andhave enabled liquidity in secondary market to alarge extent. Others investors in G-sec includemutual funds, primary and satellite dealers, andConstituent SGL accounts with banks and PDs.

Data on the secondary market transactions inG-sec, both outright and Repos, are publishedin the Weekly Statistical Supplement, RBIBulletin and other regular publications of theBank in a prescribed format. The format of thedata along with explanatory notes is given inthe Annex-7.4.

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et

Annex 7.1

REPO/REVERSE REPO AUCTIONS UNDER LIQUIDITY ADJUSTMENT FACILITY

(Rs. Crore)

Repo REPO (Injection) REVERSE REPO (absorbtion) Net injection (+) Outstanding

LAF Date period Bids Received Bids Accepted Cut-Off Bids Received Bids Accepted Cut-Off absorption (-) Amount

(Day(s)) Number Amount Number Amount Rate(%) Number Amount Number Amount Rate (%) of liquidity (6-11) @

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)

Mmm dd, yyyy d1 x1 y1 x11 y11 r w1 z1 w1 z1 rr yz1

$ d2 x2 y2 x12 y12 r w2 z2 w2 z2 rr yz2 AA


$ d4 x4 y4 x14 y14 r w4 z4 w4 z4 rr yz4 BB


$ d6 x6 y6 x16 y16 r w6 z6 w6 z6 rr yz6 CC


$ d8 x8 y8 x18 y18 r w8 z8 w8 z8 rr yz8 DD


$ d10 x10 y10 x20 y20 r w10 z10 w10 z10 rr yz10 EE

@ Net of overnight Repo.

With effect from October 29, 2004 nomenclature of Repo & Reverse Repo interchanged as per international usages. ‘’ -’’ No bid was received inthe auction

Note: ($) Second LAF auction introduced with effect from November 28, 2005.

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tistics

Annex 7.2

AUCTIONS OF GOVERNMENT OF INDIA TREASURY BILLS (TBS)

(Rs. crore)

Bids Received Bids Accepted Devolvement on Implicit AmountTotal Weighted Yield at Outstanding

Date of Date of Notified Total Face Value Total Face Value Issue Average Cut-off as on theAuction Issue Amount Number Compe- Non- Number Compe- Non- PDs /

RBI(8+9+ price Price Date

titive Com- titive Com- SDs* 10+11) (per of Issue

petitive petitive cent) (Face Value)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

91-Day Treasury Bills

2005-2006

Mmm dd, yyyy Mmm1 dd, yyyy x1 y1 z1 nc1 y11 z11 nc1 d1 d11 t1 p1 y1 o1



2005-2006




2005-2006



Notes: 1. For 91-day TBs, Uniform Price auction was introduced from November 06, 1998. The format of auction has been changed to multipleprice auction from December 11, 2002.

2. For 91-day TBs, Notified amount of Rs. 2,000 crore includes Rs.1,500 crore under Market Stabilisation Scheme (MSS). For 182-dayTBs, Notified amount of Rs. 1,500 crore includes Rs.1,000 crore under MSS.

For 364-day TBs, Notified amount of Rs. 2,000 crore includes Rs.1,000 crore under MSS.

3. Effective from auction dated June 2,1999, non competetive bids have been allowed in case of 364-day TBs.

4. The presentation of implicit yield at cut-off price has been changed from actual/364 day count convention to actual/365 day countconvention from auction dated October 27, 2004.

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Annex 7.3

DETAILS OF CENTRAL GOVERNMENT MARKET BORROWINGS

Bids received Bids Accepted Devolve- Indicative

Devolve- ment/ YTM at

Date Date Maturity(Comp) (Non Comp) (Comp) (Non Comp)

ment Private cut-off

of of Notified period/ year on place- price/ NOMENCLATURE

Auction Issue Amount Residual Primary ment reissue OF LOAN

period Number Value Number Value Number Value Number Value Dealers on price/

RBI coupon

rate

yyyy-yy

DD- DD- N1 m1 yyyy x1 v1 nx1 nv1 x11 v11 nx1 nv1 d1 dr1 pr1/ x.xx per cent

MMM- MMM- yi1 Government

YYYY YYYY Stock yyyy @ **










@ Reissue

u Uniform Price Auction

# Yield based Auction

PP Private Placement with RBI

** Allotment to Non-Competitive Bidders at wrt.average yield/price of competitive bids

u Uniform Price Auction

& Mark up (spread) over the base rate.

(*) All the bids were rejected.

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Annex 7.4

TURNOVER IN GOVERNMENT SECURITIES MARKET (FACE VALUE) @

(Rs. Crore)

yyyy-yyyy

Items \ Week Ended mmm mmm mmm mmm mmm mmmdd, yyyy dd, yyyy dd, yyyy dd, yyyy dd, yyyy dd, yyyy

1 2 3 4 5 6 7

I. Outright Tranasctions

1. Govt. of India dated Securities a1 b1 c1 d1 e1 f1

2. State Government Securities a2 b2 c2 d2 e2 f2

3. 91 Day Treasury Bills a3 b3 c3 d3 e3 f3



II. RBI * a6 b6 c6 d6 e6 f6

@ Excluding Repo Transactions.

* RBI’s Sales and Purchases include transactions in other offices also.

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Annex 7.4 (Contd.)

GOVERNMENT OF INDIA- TREASURY BILLS OUTSTANDING (FACE VALUE)

(Rs. Crore)

mmm dd, yyyy Variation in total

Treasury Bills of TotalDifferent Maturities Treasury Over Over

Holders Bills The End14 Day 91 Day 182 Day 364 Day (2+3+4+5) Week March(Inter- (Auction) (Auction) (Auction)

Mediate)

1 2 3 4 5 6 7 8

Reserve Bank of India a1 a2 a3 a4 a5 w1 x1

Banks b1 b2 b3 b4 b5 w2 x2

State Governments c1 c2 c3 c4 c5 w3 x3

Others d1 d2 d3 d4 d5 w4 x4

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Annex 7.4 (Concld.)

SECONDARY MARKET TRANSACTIONS IN GOVERNMENT SECURITIES (FACE VALUE) @

(Rs. Crore)

For the week ended For the week endedmmm dd,yyyy mmm dd,yyyy

Items YTM (%PA) YTM (%PA)Amount Indicative ** Amount Indicative

Minimum Maximum Minimum Maximum

1 2 3 4 5 6 7

I. Outright Tranasctions1. Govt. of India dated securities

maturing in the year2006-07 x1 my1 mxy1 z1 mz1 mxz12007-08 x2 my2 mxy2 z2 mz2 mxz22008-09 x3 my3 mxy3 z3 mz3 mxz32009-10 x4 my4 mxy4 z4 mz4 mxz42010-11 x5 my5 mxy5 z5 mz5 mxz52011-12 x6 my6 mxy6 z6 mz6 mxz62012-15 x7 my7 mxy7 z7 mz7 mxz72015-16 x8 my8 mxy8 z8 mz8 mxz8Beyond 2016 x9 my9 mxy9 z9 mz9 mxz9

2. State Government Securities x10 my10 mxy10 z10 mz10 mxz103. Treasury Bills

(Residual Maturity in Days)A. Upto 14 Days x11 my11 mxy11 z11 mz11 mxz11B. 15 - 91 Days x12 my12 mxy12 z12 mz12 mxz12C. 92 - 182 Days x13 my13 mxy13 z13 mz13 mxz13D. 183 - 364 Days x14 my14 mxy14 z14 mz14 mxz14

II. RBI * : Sales x15 z15: Purchases x16 z16

III. Repo Transactions #(Other than with RBI)1. Govt. of India Dated Securities x17 my17 mxy17 z17 mz17 mxz17

(d1) (dm1) (d11) (dm11)2. State Govt. Securities x18 my18 mxy18 z18 mz18 mxz18

(d2) (dm2) (d12) (dm12)3. 91 Day Treasury Bills x19 my19 mxy19 z19 mz19 mxz19



(d5) (dm5) (d15) (dm15)IV. RBI : Repo # ^ x22 r1 r2 z22 r1 r2

: Reverse Repo ! x23 rr1 rr2 z23 rr1 rr2

@ As reported in subsidiary general ledger accounts at RBI, Mumbai which presently accounts for nearly 98per cent of total transactions in the country.

* RBI’s sales and purchases include transactions in other offices also.# Represent the first leg of transactions^ Data relate to Repo auctions under liquidity adjustment facility effective from June 05, 2000! Includes Reverse Repo auctions under liquidity adjustment facility** Minimum and maximum YTMS (% P.A.) indicative have been given excluding transactions of non-standard

lot size (less than Rs. 5 crore)

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Accrued interest

The accrued interest on a bond is the amountof interest accumulated on a bond since the lastcoupon payment. The interest has been earned,but because coupons are only paid at setintervals the investor has not gained the moneyyet. In India day count convention for G-Secs is30/360.

Bid price/yield

The price/yield being offered by a potential buyerfor a security.

Competitive Bid

Competitive bid refers to the bid for the stockat the price stated by a bidder in an auction.

Coupon

The rate of interest paid on a debt security ascalculated on the basis of the security’s facevalue.

Coupon frequency

Coupon payments are made at regular intervalsthroughout the life of a debt security and maybe quarterly, semi-annual (twice a year) orannual payments.

Face value

Face value is the amount that is to be paid toan investor at the maturity date of the security.Debt securities can be issued at varying facevalues, however in India they typically have aface value of Rs.100 The face value is also knownas the repayment amount at par. This amountis also referred as redemption value, principalvalue (or simply principal), maturity value or parvalue.

Floating-rate Bond

Bonds whose interest rate varies with changesin a pre-specified market interest rate.

Annex 7.5

GLOSSARY

Gilt/Government Securities

Government securities are also known as giltsor gilt edged securities. “Government security”means a security created and issued by theGovernment for the purpose of raising a publicloan or for any other purpose as may be notifiedby the Government in the Official Gazette andhaving one of the forms mentioned in The PublicDebt Act, 1944.

LAF

Liquidity Adjustment Facility (LAF) is a facilityby which the RBI adjusts the daily liquidity inthe domestic markets (India) either by injectingfunds or by withdrawing them out.

Maturity Date

The date when the principal (face value) is paidback. The final coupon and the face value of adebt security is repaid to the investor on thematurity date. The time to maturity can varygreatly from short term to long term (30 years).

Non-competitive Bid

Non-competitive bidding means the bidder wouldbe able to participate in the auctions of datedgovernment securities without having to quotethe yield or price in the bid. The allotment tothe non-competitive segment will be at theweighted average rate that will emerge in theauction on the basis of competitive bidding. Itis an allocating facility wherein a part of totalsecurities are allocated to bidders at a weightedaverage price of successful competitive bid.

Open Market Operations:

Central banks buy bonds in exchange for money,thus increasing the stock of the money, or sellbond; thus reducing the money stock. Thisoperation is known as Open Market Operation.

Price

The price quoted is for per Rs. 100 of face value.The price of any financial instrument is equal

276


to the present value of the expected cash flow.The price one pays for a debt security is basedon a number of factors. Newly-issued debtsecurities usually sell at, or close to, their facevalue. On the secondary market, where already-issued debt securities are bought and soldbetween investors, the price one pays for a bondis based on a host of variables, including marketinterest rates, accrued interest, supply anddemand, credit quality, maturity date, state ofissuance, market events and the size of thetransaction.

Primary Dealers

In order to accomplish the objective of coveringthe government borrowing needs as cheaply andefficiently as possible, a group of highly qualifiedfinancial firm/banks are appointed to play therole of specialist intermediaries in thegovernment security market between the issueron the one hand and the market on the other.These are generally called Primary dealers ormarket makers. In return of a set of obligations,such as making continuous bids and offer pricein the marketable government securities orsubmitting reasonable bids in the auctions, thesefirms receive a set of privileges in the primary/secondary market.

Private Placement

A private placement is a direct offer by acompany to subscribe to a security issued by it,which is not available to any person other thanthe person to whom the offer is made. Section67(3) of Company Act, 1956, while specifyingwhat does not constitute a public offer, laysdown two basic conditions, viz., (a) the shareand debentures should not be available forsubscription to persons other than thosereceiving the offer, and (b) the offer should bemade to less than 50 persons.

Repo Rate

Repo rate is the return earned on a repotransaction expressed as an annual interest rate.

Repo/Reverse Repo

Repo means an instrument for borrowing fundsby selling securities of the Central Governmentor a State Government or of such securities of alocal authority as may be specified in this behalfby the Central Government or foreign securities,with an agreement to repurchase the saidsecurities on a mutually agreed future date atan agreed price which includes interest for thefund borrowed.

Reverse Repo means an instrument for lendingfunds by purchasing securities of the CentralGovernment or a State Government or of suchsecurities of a local authority as may be specifiedin this behalf by the Central Government orforeign securities, with an agreement to resellthe said securities on a mutually agreed futuredate at an agreed price which includes interestfor the fund lent.

Secondary Market

The market in which outstanding securities aretraded. This term differentiates from the primaryor initial market when securities are sold for thefirst time. Secondary market refers to the buyingand selling that goes on after the initial publicsale of the security.

Tap Sale

Under Tap sale, a certain amount of securitiesis created and made available for sale, generallywith a minimum price, and is sold to the marketas bids are made. These securities may be soldover a period of day or even weeks; andauthorities may retain the flexibility to increasethe (minimum) price if demand proves to bestrong or to cut it if demand weakens. Tap andcontinuous sale are very similar, except that withTap sale the debt manager tends to take a morepro-active role in determining the availability andindicative price for tap sales. Continuous saleare essentially at the initiative of the market.

Annex 7.5 (Contd.)

277


Treasury Bills

Debt obligations of the government that havematurities of one year or less is normally calledTreasury Bills or T-Bills. Treasury Bills are short-term obligations of the Treasury/Government.They are instruments issued at a discount tothe face value and form an integral part of themoney market.

Underwriting

The arrangement by which investment bankersundertake to acquire any unsubscribed portionof a primary issuance of a security.

Weighted Average Price/yield

It is the weighted average mean of the price/yield where weight being the amount used atthat price/yield. The allotment to the non-competitive segment will be at the weightedaverage price/yield that will emerge in theauction on the basis of competitive bidding.

Yield

The annual percentage rate of return earned ona security. Yield is a function of a security’spurchase price and coupon interest rate. Yieldfluctuates according to numerous factorsincluding global markets and the economy.

Yield to maturity (YTM)

Yield to maturity is the total return one wouldexcept to receive if the security is being helduntil maturity. Yield to maturity is essentiallythe discount rate at which the present value offuture payments (investment income and returnof principal) equals the price of the security.

Yield curve

The graphical relationship between yield andmaturity among bonds of different maturities andthe same credit quality. This line shows the termstructure of interest rates. It also enablesinvestors to compare debt securities withdifferent maturities and coupons.

Annex 7.5 (Concld.)

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8. FISCAL SECTOR STATISTICS

8.1. Introduction

The term ‘Budget’ refers broadly to the financialproposals, which the Minister for Finance putsbefore the Houses of Parliament or the stateLegislature as the case may be. In theConstitution of India, reference is made to the‘Laying of Annual financial Statement before theHouses of Parliament or the Legislatures of theStates’. This document is a statement ofestimated receipts and expenditure of thegovernment for the coming financial year and isgenerally known as the ‘Budget’. It also containsactuals for the preceding year and revisedestimates of the current year. The Reserve Bankof India compiles and disseminates the budgetarydata of the Central Government, StateGovernments, combined finances of the Centraland State Governments, and public debt. Studiesbased on these data are regularly published inReserve Bank of India Bulletin.

8.2. Deficit Indicators

In general, RBI follows the Government of India’sapproach/methodology for compilation in respectof various deficits/fiscal indicators. Details ofmethodology followed in budget 2006-07 arepresented in Annex-8.1. The definitions ofvarious deficit indicators used in compilation offiscal statistics are as follows: Revenue Deficitdenotes the difference between revenue receiptsand revenue expenditure. The conventional deficit(budgetary deficit) is the difference between allreceipts and expenditure, both revenue andcapital. The gross fiscal deficit (GFD) is the excessof total expenditure including loans net ofrecovery over revenue receipts (including externalgrants) and non-debt capital receipts. Since1999-2000, GFD excludes States’ share in smallsavings as per the new system of accounting.The net fiscal deficit is the gross fiscal deficitless net lending of the Central Government. Thenet primary deficit denotes net fiscal deficit minusnet interest payments. Primary revenue balancedenotes revenue deficit minus interest payments.The net RBI credit to the Central Governmentrepresents the sum of variations in the RBI’s

holdings of (i) Central Government datedsecurities, (ii) Treasury Bills, (iii) Rupee Coinsand (iv) Loans and Advances from RBI to Centresince April 1, 1997 adjusted for changes in theCentre’s cash balances with RBI in the case ofCentre. Regarding State Governments, net RBIcredit refers to variation in loans and advancesgiven to them by the RBI net of their incrementaldeposits with the RBI, for the State Governmentshaving accounts with the RBI.

8.3. Combined Finances

While defining the combined deficit/fiscalindicators, the Bank broadly follows theapproach/methodology adopted by InternationalMonetary Fund (IMF) in its Government FinanceStatistics (GFS) Manual. The fiscal variables areworked as the sum of Centre and States minusinter-governmental transactions. The data oninter-governmental transactions viz. States’ sharein Central taxes, grants to States and interestreceipts from States in the revenue account;loans and advances to States and recovery ofloans from States in the capital account, aretaken from the Central Government budgetdocuments. Combined GFD is the GFD ofCentral Government plus GFD of StateGovernments minus net lending (loans andadvances from States minus recovery of loansand advances from States) from CentralGovernment to State Governments. Revenuedeficit is the difference between revenue receiptsand revenue expenditure of the Central and StateGovernments adjusted for inter-Governmentaltransactions in the revenue account. Grossprimary deficit is defined as combined GFDminus combined interest payments. Combinedinterest payments are sum of interest paymentsof the Centre and State governments net ofinterest payments by State governments to theCentre.

8.4. State Government Finances

All moneys coming into the possession of anddisbursed by the public officers of the State inthe course of their official duties have to be

279

Fiscal Sector Statistics

properly accounted for in the primary accountsmaintained by them and the form in which theaccounts are to be kept is prescribed by theComtroller and Auditor General of India (CAG).The Finance Department is required to preparefor each financial year, a statement of all receiptsand expenditure expected to be realised orincurred during the year, which is called theAnnual Financial Statement (AFS) or the Budgetas laid down in Article 202 of the Constitution.Under Article 150 of the Constitution of India,the accounts of States are to be kept in suchform as the CAG may, with the approval of thePresident, prescribe. In exercise of these powers,the CAG has prescribed a list of major and minorheads of accounts in which Governmentaccounts should be kept. In accordance with theprovisions of Articles 266 and 267 of theConstitution, the accounts of the Governmentare to be maintained into three main parts -Part I: Consolidated Fund of the State, Part II:Contingency Fund of the State, and Part III:Public Account of the State. These accounts arealso shown in the budget documents of the StateGovernments.

All budgetary heads are broadly classified intotwo viz., Revenue Account (Revenue Receipts andRevenue Expenditure) and Capital account(Capital Receipts and Capital Disbursements) asset out in Annex 8.2. Department of EconomicAnalysis and Policy (Division of State and LocalFinances) of RBI brings out an annual Study‘State Finances - A Study of Budgets’ based onbudget documents of the State Governments. TheStudy may be referred to for further detailedclassification of budgetary heads.

As an illustration, Annex 8.3 presents theexplanatory notes as given in the budgetdocuments of the Government of Maharashtra.

8.5. Measures of Resource Gap: Conceptsand Definitions

There is no single criterion to measure theresource gap in the Government finances. Thechoice of a particular measure is, therefore,purpose specific. In the context of Indian publicfinance, the traditional approach while measuringthe resource gap takes into consideration

revenue account gap, capital account gap andoverall gap. Of late, there has been a frequentmention of the concept of gross fiscal deficit(GFD) by researchers while analyzing thefinances of the State Governments; one variantof GFD viz., primary deficit, which is analyticallyuseful to examine the current operations of theGovernment finances, has been introduced inIndian public finance. The different measures ofdeficit (resource gap) are set out below.

(a) Revenue Deficit (RD) denotes the differencebetween revenue receipts and revenueexpenditure.

Revenue Account Gap = Revenue Deficit(RD) = Revenue Receipts (RR) – RevenueExpenditure (RE)

(b) Capital Deficit denotes the differencebetween capital receipts and capitaldisbursements.

Capital Account Gap = Capital AccountDeficit (CAD) = Capital Receipts (CR) –Capital Disbursements (CD)

(c) Conventional deficit (budgetary deficit oroverall deficit) is the difference between allreceipts and expenditure, both revenue andcapital.

Overall Gap = RD+CAD = (RR-RE) + (CR-CD) = [(RR+CR) – (RE+CD)]

(d) Gross Fiscal Deficit (GFD) is the differencebetween aggregate disbursements net ofdebt repayments and recovery of loans andrevenue receipts and non-debt capitalreceipts.

Gross Fiscal Deficit (GFD)

= RE + [CD-(Discharge of Internal Debt(DID) + Repayment of Loans to Centre(RLC) + Recoveries of Loans & Advances(RLA)] – RR

= RE + [Capital Outlay (CO) + Loans &Advances by States (LAS) + DID+RLC –(DID +RLC+RLA)] -RR

= (RE-RR) + [CO+ (LAS-RLA) + (DID-DID)+ (RLC-RLC)]

= RD+CO+ Net Lending (NL)

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(e) Net Fiscal Deficit (NFD) is the gross fiscaldeficit less net lending of the StateGovernments.

Net Fiscal Deficit (NFD) = GFD – (LAS-RLA)

(f) Gross Primary Deficit (GPD) is defined asGFD minus interest payments.

Primary Deficit (PD) = GFD – InterestPayment (IP)

(g) Net Primary Deficit (NPD) denotes net fiscaldeficit (NFD) minus net interest payments.

Net Primary Deficit (NPD) = NFD – [(IP-Interest Receipts (IR)]

(h) Primary revenue balance denotes revenuedeficit minus interest payments.

Primary Revenue Balance (PRB) = RD – IP

(i) Net primary revenue balance denotesrevenue deficit minus net interest payments.

Net Primary Revenue Balance (NPRB) = RD– (IP-IR)

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Annual Financial Statement

Under Article 112 of the Constitution, astatement of estimated receipts and expenditureof the Government of India has to be laid beforeParliament in respect of every financial yearwhich runs from 1st April to 31st March. Thisstatement titled “Annual Financial Statement” isthe main Budget document. The AnnualFinancial Statement shows the receipts andpayments of Government under the three partsin which Government accounts are kept: (i)Consolidated Fund, (ii) Contingency Fund and(iii) Public Account.

2. All revenues received by Government, loansraised by it, and also its receipts from recoveriesof loans granted by it, form the ConsolidatedFund. All expenditure of Government is incurredfrom the Consolidated Fund and no amount canbe withdrawn from the Fund withoutauthorisation from Parliament.

3. Occasions may arise when Government mayhave to meet urgent unforeseen expenditurepending authorisation from Parliament. TheContingency Fund is an imprest placed at thedisposal of the President to incur suchexpenditure. Parliamentary approval for suchexpenditure and for withdrawal of an equivalentamount from the Consolidated Fund issubsequently obtained and the amount spentfrom Contingency Fund is recouped to the Fund.The corpus of the Fund authorised by theParliament, at present, is Rs.500 crore.

4. Besides the normal receipts and expenditureof Government which relate to the ConsolidatedFund, certain other transactions enterGovernment accounts, in respect of which,Government acts more as a banker, for example,transactions relating to provident funds, smallsavings collections, other deposits, etc. Themoneys thus received are kept in the Public

Annex 8. 1

KEY TO BUDGET DOCUMENTS - BUDGET 2006-2007*

* Reproduction from the Union Budget 2006-07.

Account and the connected disbursements arealso made the reform. Generally speaking, PublicAccount funds do not belong to Government andhave to be paid back some time or the other tothe persons and authorities who deposited them.Parliamentary authorisation for payments fromthe Public Account is, therefore, not required.In a few cases, a part of the revenue ofGovernment is set apart in separate funds forexpenditure on specific objects like roaddevelopment, primary education including mid-day meal scheme, etc. These amounts arewithdrawn from the Consolidated Fund with theapproval of Parliament and kept in the PublicAccount for expenditure on the specific objects.The actual expenditure on the specific objectsis, however, again submitted for vote ofParliament even though the moneys have alreadybeen earmarked by Parliament for transfer tothe funds.

5. Under the Constitution, Budget has todistinguish expenditure on revenue account fromother expenditure. Government Budget, therefore,comprises (i) Revenue Budget; and (ii) CapitalBudget.

6. Revenue Budget consists of the revenuereceipts of Government (tax revenues and otherrevenues) and the expenditure met from theserevenues. Tax revenues comprise proceeds oftaxes and other duties levied by the Union. Theestimates of revenue receipts shown in theAnnual Financial Statement take into accountthe effect of the taxation proposals made in theFinance Bill. Other receipts of Governmentmainly consist of interest and dividend oninvestments made by Government, fees, andother receipts for services rendered byGovernment. Revenue expenditure is for thenormal running of Government departments andvarious services, interest charges on debtincurred by Government, subsidies, etc. Broadlyspeaking, expenditure that does not result increation of assets is treated as revenueexpenditure. All grants given to State

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Governments and other parties are also treatedas revenue expenditure even though some of thegrants may be for creation of assets.

7. Capital Budget consists of capital receiptsand payments. The main items of capital receiptsare loans raised by Government from publicwhich are called Market Loans, borrowings byGovernment from Reserve Bank and other partiesthrough sale of Treasury Bills, loans receivedfrom foreign Governments and bodies andrecoveries of loans granted by CentralGovernment to State and Union TerritoryGovernments and other parties. Capitalpayments consist of capital expenditure onacquisition of assets like land, buildings,machinery, equipment, as also investments inshares, etc., and loans and advances grantedby Central Government to State and UnionTerritory Governments, Government companies,Corporations and other parties. Capital Budgetalso incorporates transactions in the PublicAccount.

Accounting Classification

8. The estimates of receipts and disbursementsin the Annual Financial Statement and ofexpenditure in the Demands for Grants areshown according to the accounting classificationprescribed under Article 150 of the Constitution.This classification is intended to allow Parliamentand the public to make a meaningfulappreciation of allocation of resources andpurposes of Government expenditure.

9. Under the Constitution, certain items ofexpenditure like emoluments of the President,salaries and allowances of the Chairman and theDeputy Chairman of the Rajya Sabha and theSpeaker and the Deputy Speaker of the LokSabha, salaries, allowances and pensions ofJudges of the Supreme Court, Comptroller andAuditor-General of India and the CentralVigilance Commission, interest on and repaymentof loans raised by Government and paymentsmade to satisfy decrees of courts etc. are chargedon the Consolidated Fund and are not requiredto be voted by the Lok Sabha. The AnnualFinancial Statement shows the expenditure

charged on the Consolidated Fund separately.

Demands for Grants

10. The estimates of expenditure from theConsolidated Fund included in the AnnualFinancial Statement and required to be votedby the Lok Sabha are submitted in the form ofDemands for Grants in pursuance of Article 113of the Constitution. Generally, one Demand forGrant is presented in respect of each Ministryor Department. However, in respect of largeMinistries or Departments more than oneDemand is presented. Each Demand normallyincludes the total provisions required for aservice, that is, provisions on account of revenueexpenditure, capital expenditure, grants to Stateand Union Territory Governments and also loansand advances relating to the service. In regardto Union Territories without Legislature, aseparate Demand is presented for each of theUnion Territory. Where the provision for a serviceis entirely for expenditure charged on theConsolidated Fund, for example, interestpayments, a separate Appropriation, as distinctfrom a Demand, is presented for that expenditureand it is not required to be voted by Parliament.Where, however, expenditure on a serviceincludes both ‘voted’ and ‘charged’ items ofexpenditure, the latter are also included in theDemand presented for that service but the ‘voted’and ‘charged’ provisions are shown separatelyin that Demand.

11. The Demands for Grants are presented to theLok Sabha along with the Annual FinancialStatement. Each Demand first gives the totals of‘voted’ and ‘charged’ expenditure as also the‘revenue’ and ‘capital’ expenditure included in theDemand separately and also the grand total of theamount of expenditure for which the Demand ispresented. This is followed by the estimates ofexpenditure under different major heads ofaccount. The break up of the expenditure undereach major head between ‘Plan’ and ‘Non-Plan’ isalso given. The amounts of recoveries taken inreduction of expenditure in the accounts are alsoshown. A summary of Demands for Grants is givenat the beginning of this document, while details of‘New Service’ or ‘New Instrument of Service’ suchas formation of a new company, undertaking or a

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new scheme, etc., if any, are indicated at the endof the document.

Finance Bill

12. At the time of presentation of the AnnualFinancial Statement before Parliament, a FinanceBill is also presented in fulfilment of therequirement of Article 110(1)(a) of theConstitution, detailing the imposition, abolition,remission, alteration or regulation of taxesproposed in the Budget. A Finance Bill is aMoney Bill as defined in Article 110 of theConstitution. It is accompanied by aMemorandum explaining the provisions includedin it.

Memorandum Explaining the Provisions inthe Finance Bill

13. To facilitate understanding of the taxationproposals contained in the Finance Bill, theprovisions and their implications are explainedin the document titled Memorandum Explainingthe Provisions of the Finance Bill.

14. The Budget documents presented in termsof the Constitution have to fulfil certain legaland procedural requirements and hence may notby themselves give a clear indication of the majorfeatures of the Budget. To facilitate an easycomprehension of the Budget, certain otherexplanatory documents are presented along withthe Budget.

Budget at a Glance

15. The document Budget at a Glance showsin brief, receipts and disbursements along withbroad details of tax revenues and other receipts.This document also exhibits broad break-up ofexpenditure - Plan and Non-Plan, allocation ofPlan outlays by sectors as well as by Ministries/Departments and details of resources transferredby the Central Government to State and UnionTerritory Governments. This document alsoshows the revenue deficit, the gross primarydeficit and the gross fiscal deficit of the CentralGovernment. The excess of Government’s revenueexpenditure over revenue receipts constitutesrevenue deficit of Government. Governmentmainly borrows through issue of dated securities,

i.e. market borrowings. Apart from this,Government also borrows funds under manyschemes which form part of capital receipts. Thedifference between the total expenditure ofGovernment by way of revenue, capital and loansnet of repayments on the one hand and revenuereceipts of Government and capital receiptswhich are not in the nature of borrowing butwhich finally accrue to Government on the other,constitutes gross fiscal deficit. Gross primarydeficit is measured by gross fiscal deficit reducedby gross interest payments. In the Budgetdocuments ‘gross fiscal deficit’ and ‘gross primarydeficit’ have been referred to in abbreviated form‘fiscal deficit’ and ‘primary deficit’, respectively.

Expenditure Budget Vol. 1

16. Expenditure Budget Vol. 1 deals withrevenue and capital disbursements of variousMinistries/Departments and gives the estimatesin respect of each under ‘Plan’ and ‘Non-Plan’.This also gives analysis of various types ofexpenditure and broad reasons for the variationsin estimates.

17. Under the present accounting andbudgetary procedures, certain classes of receipts,like payments made by one department toanother and receipts of capital projects orschemes are taken in reduction of theexpenditure of the receiving department. Theestimates of expenditure included in theDemands for Grants are for the gross amountswhile the estimates of expenditure included inthe Annual Financial Statement are for the netexpenditure as will be reflected in the accounts,that is, after taking into account the recoveries.The document Expenditure Budget makes certainother refinements like netting expenditure ofrelated receipts so that inflation of receipts andexpenditure figures are avoided and there canbe a better appreciation of the magnitudes ofvarious expenditure. The annex showingguarantees given by Central Government andoutstanding as at the end of March, 2005 hasbeen included in Receipt Budget. Contributionsto International bodies are shown in a separateannex. A statement each showing (i) theestimated strength of establishment of variousGovernment Departments and provision made

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therefor; and (ii) Plan grants and loans releasedby Ministries/ Departments directly to State anddistrict level autonomous bodies, under variousCentral and Centrally Sponsored Plan schemesare also included in this document.

Expenditure Budget Vol. 2

18. The provisions made for a scheme or aprogramme may spread over a number of majorheads in the Revenue and Capital sections in aDemand for Grants. In the Expenditure BudgetVol. 2, the estimates made for a scheme/programme are brought together and shown ona net basis at one place, by major heads. Tounderstand the objectives underlying theexpenditure proposed for various schemes andprogrammes in the Demands for Grants, suitableexplanatory notes are included in this volumein which, wherever necessary, brief reasons forvariations between the Budget estimates andrevised estimates for the current year andrequirements for the Budget year are also given.

Receipts Budget

19. Estimates of receipts included in the AnnualFinancial Statement are further analysed in thedocument “Receipts Budget”. The documentprovides details of tax and non-tax revenuereceipts and capital receipts and explains theestimates. The document also provides thearrears of tax revenues and non-tax revenues,as mandated under the Fiscal Responsibility andBudget Management Rules, 2004. Trend ofreceipts and expenditure along with deficitindicators, statement pertaining to NationalSmall Savings Fund (NSSF), statement ofrevenues foregone, statement of liabilities,statement of contingent liabilities, statements ofassets and details of external assistance are alsoincluded in Receipts Budget.

Detailed Demands for Grants

20. The Demands for Grants are followed bythe Detailed Demands for Grants laid on the tableof the Lok Sabha some time after thepresentation of the Budget, but before thediscussion on Demands for Grants commences.These Detailed Demands for Grants show furtherdetails of the provisions included in the Demands

for Grants as also of actual expenditure duringthe previous year. A break up of the estimatesrelating to each programme/organisation,wherever the amount involved is not less thanRs.10 lakhs, is given under a number of objectheads which indicate the categories and natureof expenditure incurred on that programme, likesalaries, wages, travel expenses, material andequipment, grants-in-aid, etc. At the end of theseDetailed Demands are shown the details ofrecoveries taken in reduction of expenditure inthe accounts.

Resources transferred to States

21. The total resources transferred to State andUnion Territory Governments are indicated in astatement incorporated in the document Budgetat a Glance. Further details of these transfersby way of share of taxes, grants-in-aid and loansare given in Expenditure Budget Vol.1. Bulk ofgrants and loans are disbursed by the Ministryof Finance and are included in the Demand‘Transfers to State and Union TerritoryGovernments’, which is presented on its behalf.The grants and loans released by otherMinistries/Departments are provided for in theirrespective Demands.

Plan Outlay

22. Plan expenditure forms a sizeable proportionof the total expenditure of the CentralGovernment. The Demands for Grants of thevarious Ministries show the Plan expenditureunder each head separately from the Non-Planexpenditure. The Expenditure Budget Vol. 1 alsogives the total Plan provisions for each of theMinistries arranged under the various heads ofdevelopment and highlights the budget provisionsfor the more important Plan programmes andschemes. A description of important schemesincluded in the Plan along with the objectives,targets and achievements is given in thePerformance Budget of the respective Ministry.Variations in the estimates of Plan expenditureare also explained in this document.

Performance Budget

23. Physical and financial aspects of majorprogrammes and schemes are included in the

285


Performance Budgets presented to Parliamentseparately by the Ministries/Departments.Performance Budgets are prepared and circulatedto Members of Parliament by all Ministries/Departments dealing with developmentalactivities. The Performance Budget presents thebudget of the Ministry/Department in terms offunctions, programmes and activities and givesappraisal reports separately in respect of majorCentral sector projects/programmes estimated tocost Rs.100 crores or more. It also includes astatement on the programmes and performanceof the various public sector undertakings underthe Ministry/ Department indicating, amongother things, the capacity installed and utilised,physical targets and achievements, results ofoperation, return on capital etc. PerformanceBudget serves the management as a tool ofadministrative and financial control in theimplementation of development programmes.

Public Sector Enterprises

24. A large part of the Plan expenditure incurredby the Central Government is through publicsector enterprises. Budgetary support forfinancing outlays of these enterprises is providedby Government either through investment inshare capital or through loans. ExpenditureBudget Vol. 1 shows the estimates of capital andloan disbursements to public sector enterprisesin 2005-2006 and 2006-2007 for Plan and Non-Plan purposes and also the extra budgetaryresources available for financing their Plans. Adetailed report on the working of public sectorenterprises is given in the document titled ‘PublicEnterprises Survey brought out separately by theDepartment of Public Enterprises. A report onthe working of the enterprises under the controlof the various administrative Ministries is alsogiven in the Annual Reports of the variousMinistries circulated to Members of Parliamentseparately. The annual reports along with theaudited accounts of each of the Governmentcompanies are also separately laid beforeParliament. Besides, the reports of theComptroller and Auditor General of India on theworking of various public sector enterprises arealso laid before Parliament.

Commercial Departments

25. Railways is the principal departmentally-runcommercial undertaking of Government. TheBudget of the Railways and the Demands forGrants relating to Railway expenditure arepresented to Parliament separately. The totalreceipts and expenditure of the Railways areincorporated in the Annual Financial Statementof the Government of India. However, to portraythe actual working and not inflate either receiptsor expenditure, the expenditure as reflected inthe Receipts Budget & Expenditure Budget Vol.1 and 2 has been taken net of receipts. TheDemands for Grants of the Department ofTelecommunications are presented along withother Demands of the Central Government.

26. The receipts and expenditure of the DefenceDepartment shown in the Annual FinancialStatement are explained in greater detail in thedocument Defence Services Estimates presentedalong with the Detailed Demands for Grants ofthe Ministry of Defence.

27. The details of grants given to bodies otherthan State and Union Territory Governments aregiven in the statements of Grants-in-aid paid tonon-Government bodies appended to DetailedDemands for Grants of the various Ministries.Annexure 6 to Expenditure Budget Vol.1 showsdetails of grants-in-aid exceeding Rs.5 lakhs(recurring) or Rs.10 lakhs (non-recurring) toprivate institutions, organisations and individualssanctioned during the year 2004-2005.

Annual Report

28. A descriptive account of the activities ofeach Ministry/Department during the year 2005-2006 is given in the document Annual Reportwhich is brought out separately by eachMinistry/Department and circulated to Membersof Parliament at the time of discussion on theDemands for Grants.

Economic Survey

29. The Budget of the Central Government isnot merely a statement of receipts andexpenditure. Since Independence, with thelaunching of Five Year Plans, it has also becomea significant statement of governmental policy.

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The Budget reflects and shapes, and is, in turn,shaped by the country’s economic life. TheEconomic Survey brings out the economic trendsin the country, which facilitates a betterappreciation of the mobilisation of resources andtheir allocation in the Budget. The Surveyanalyses the trends in agricultural and industrialproduction, infrastructure, employment, moneysupply, prices, imports, exports, foreign exchangereserves and other relevant economic factorswhich have a bearing on the Budget, and ispresented to the Parliament ahead of the Budgetfor the ensuing year.

30. The Budget of the Government has animpact on the economy as a whole. For a betterappreciation of the impact of governmentalreceipts and expenditure on the other sectors ofthe economy, it is necessary to group them interms of economic magnitudes, for example, howmuch is set aside for capital formation, howmuch is spent directly by the Government andhow much is transferred by Government to othersectors of the economy by way of grants, loans,etc. This analysis is contained in the documentEconomic and Functional Classification of theCentral Government Budget which is brought outby the Ministry of Finance separately.

Appropriation Bills

31. After the Demands for Grants are voted bythe Lok Sabha, Parliament’s approval to thewithdrawal from the Consolidated Fund of theamounts so voted and of the amount requiredto meet the expenditure charged on theConsolidated Fund is sought through theAppropriation Bill. Under Article 114(3) of theConstitution, no amount can be withdrawn fromthe Consolidated Fund without the enactmentof such a law by Parliament.

32. The whole process beginning with thepresentation of the Budget and ending withdiscussions and voting on the Demands forGrants requires sufficiently long time. The LokSabha is, therefore, empowered by theConstitution to make any grant in advance in

respect of the estimated expenditure for a partof the financial year pending completion ofprocedure for the voting of the Demands. Thepurpose of the ‘Vote on Account’ is to keepGovernment functioning, pending voting of ‘finalsupply’. The Vote on Account is obtained fromParliament through an Appropriation (Vote onAccount) Bill.

Statement of Action Taken on BudgetAnnouncments

33. This contains status of implementation oninitiatives announced by the Finance Ministerin the Budget Speech.

Medium-term Fiscal Policy Statement

34. The Medium-term Fiscal Policy Statement,as enjoined by the Fiscal Responsibility andBudget Management Act, 2003 (FRBM Act) setsforth a three year rolling target for specific fiscalindicators along with underlying assumptions.The statement includes an assessment ofsustainability relating to balance betweenrevenue receipts and revenue expenditure andthe use of capital receipts including marketborrowings for generation of productive assets.

Fiscal Policy Strategy Statement

35. The Fiscal Policy Strategy Statement, asenjoined by the FRBM Act, contains the policiesof the Central Government for the ensuingfinancial year relating to taxation, expenditure,lending and investments, administered pricing,borrowings and guarantees. It outlines thestrategic priorities of the Government in the fiscalarea, how the current policies are in conformitywith sound fiscal management principles andrationale for any major deviation in key fiscalmeasures.

Macro-economic Framework Statement

36. The Macro-economic Framework Statement,as enjoined by the FRBM Act, contains anassessment of the growth prospects of theeconomy with specific underlying assumptions.It contains assessment regarding the GDP growthrate, fiscal balance of the Central Governmentand the external sector balance of the economy.

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Revenue Account (A & B)

(A) Revenue Receipts (i+ii)

(i) Tax Revenue (a+b)

(a) States’ Own Tax Revenue

(b) States’ Share in Central Taxes

(ii) Non-Tax Revenue

(a) States’ Own Non-Tax Revenue

of which

Interest Receipts

(b) Grants from Centre (i+ii)

(i) Statutory Grants

(ii) Non-Statutory Grants

(B) Revenue Expenditure

I. Developmental Expenditure

(a) Economic Services

(b) Social Services

II. Non-Developmental Services(General Services)

(a) Organs of State

(b) Fiscal Services

(c) Interest Payments

of which

Loans from Centre

Market Borrowings

(d) Administrative Services

(e) Pensions

(f) Miscellaneous General Services

(III) Grants-in-Aid and Contributions

(IV) Compensation and Assignments toLocal Bodies and Panchayati RajInstitutions

(V) Reserve with Finance Department

Annex 8.2

BUDGETARY OPERATIONS OF STATE GOVERNMENTS – MAJOR HEADS

Capital Account (I & II)

I. Capital receipts (a to l)

(a) Internal Debt

of which

Market Loans

(b) Loans and Advances from Centre

(c) Recoveries of Loans and Advances

(d) Inter-State Settlement

(e) Contingency Fund

(f) Small Savings, Provident Funds, etc

(g) Reserve Funds

(h) Deposits and Advances

(i) Suspense and Miscellaneous

(j) Appropriation to Contingency Funds

(k) Miscellaneous Capital receipts

of which

Disinvestments

(l) Remittances

II. Capital Disbursement

(a) Capital Outlay

(b) Loans and Advances by StateGovernments

(c) Discharge of Internal Debt

of which

Discharge of Market Borrowings

(d) Repayment of Loans to Centre

(e) Inter-State Settlement

(f) Contingency Fund

(g) Small Savings, Provident Funds, etc

(h) Reserve Funds

(i) Deposits and Advances

(j) Suspense and Miscellaneous

(k) Appropriation to Contingency Funds

(l) Remittances

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1. The Accounts of the State Government iskept in the following three parts:-

Part I … … … Consolidated Fund

Part II … … … Contingency Fund

Part III … … … Public Account

2. Consolidated Fund:- In Par I (ConsolidatedFund, the scope f which has been definedin Article 266 (1) of the Constitution), thereare three main divisions, namely:-

i. Revenue

ii. Capital and

iii. Debt (comprising Public Debt, Loansand Advances and Inter-StateSettlement)

3. The first division which is known as“Revenue Account’ deals with the proceedsof taxation and other receipts classed asrevenue and the expenditure there from, thenet result of which represents the revenuesurplus or deficit for the year.

4. The second division, which is known as‘Capital Expenditure outside the RevenueAccount’ deals with the expenditure metusually from borrowed funds with the mainobject of creating assets of materialcharacter. It also includes receipts of acapital nature intended to be applied as aset-off against capital expenditure.

5. The third division comprises loans andadvances received from the CentralGovernment and the loan raised by theState government classed as internal debtof the State government (such as marketloans, ways and means advances and otherloans) and Loans and Advances made byGovernment together with repayments of theformer and recoveries of the latter. Inter-State Settlement transactions arising sincethe time of reorganization of States are alsoincluded in this division.

Annex 8.3

EXPLANATORY NOTES

6. Contingency Fund:- In Part II of theAccounts, the transactions connected withthe Contingency Fund set-up by theGovernment of Maharashtra, under Article267 (2) of the Constitution of India arerecorded. This fund is of the nature of animprest and enables the ExecutiveGovernment to meet unforeseen andemergent expenditure pending itsauthorization by the Legislature by law. Theamounts drawn from the fund are recoupedby taking a supplementary grant from theLegislature.

7. Public Account:- In Part III of the Accounts(Public Account, the scope of which hasbeen defined in Article 266 (2) of theConstitution) there are two main divisions,namely:-

(1) Debt transactions, other than thoseincluded in Part I, relating to ProvidentFund, Reserve Fund and Deposits andAdvances and

(2) Remittances.

8. The first division comprises receipts andpayments, other than those falling underDebt heads pertaining to part I, in respectof which Government incurs a liability torepay the money received or has a claim torecover the amounts paid, together withrepayments of the former and recoveries ofthe latter. The second division embracesmerely adjusting heads, under which appearremittances of cash between treasuries andtransfers between different accountingcircles. The initial debits or credits to theheads in this division are cleared eventuallyby corresponding receipts or paymentseither within the same circle of account orin an other account circle.

9. The different terms used in the Budgetliteratures and used in this publication aswell, are defined briefly in the followingparagraphs.

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10. Internal Debt of the State Government:- thiscomprises Market Loans, Ways and MeansAdvances and other loans.

11. Market loans:- This generally covers loansraised in the open market and having acurrency of more than twelve months.

12. Ways and Means Advances:- This itemcovers borrowing of a purely temporarynature repayable within twelve months,such as Ways and Means Advances fromthe Reserve Bank of India.

13. Other Loans:- This refers to loans from (a)the National Agricultural Credit (Long-termOperation) fund of the Reserve Bank ofIndia, (b) the National Co-operativeDevelopment Corporation, (c) Indian DairyCorporation, (d) Life Insurance Corporationof India, (e) Employee’s State InsuranceCorporation, etc.

14. Provident Fund and Other Accounts:- Thisheading covers interest bearing obligationsof Government in respect of funds depositedwith them (e.g. State Provident Fund, OtherProvident Funds, Insurance Fund, etc.

15. Cash Balance Investment Account:- Underthis head, transactions of the StateGovernment by way of investment of itscash balances in short and long-termsecurities and loans i.e. Treasury Bills ofthe Government of India and theGovernment of India Securities or loans ofthe other State Governments are recorded.The profits derived from such investmentsare credited as receipts under the head‘0049, Interest receipts’ in the RevenueSection. The amount appearing on thedisbursement side of this head in the totalof the amount invested for short or longperiods during the course of the year andon the receipt side, the total amountsrealized on maturity (less the discountearned or interest derived there from) duringthe year.

16. Transfer of Funds:- Under this, amountstransferred to funds and treated as revenueexpenditure under different heads are

covered. Some of the funds so covered are(1) Education Cess Fund, (2) StateElectricity Fund, (3) State Road Fund, (4)Employment Guarantee Fund, (5) StateHealth and Nutrition Fund, etc.

17. Tax Revenue*:- Tax revenue is sub-dividedin three groups mentioned below accordingto nature of tax:

(a) Taxes on Income and expenditureinclude income other than corporationtax (0021), Taxes on agriculturalincome (0022) and other taxes onincome and expenditure (0028).

(b) Taxes on property and capitaltransactions include Land Revenue(0029), Stamps and Registration fee(0030), Estate Duty (0031), and Taxeson immovable property other thanagricultural land (0035).

(c) Taxes on commodities and servicesinclude State Excise (0039), Sales Tax(0040), Taxes on Vehicles (0041), Taxeson goods and passenger (0042), Taxesand duties on electricity (0043) andOther taxes: and duties oncommodities and services (0045).State’s share of union excise duties(1603) is treated as tax revenue.

18. Non-Tax Revenue:- This group includesInterest receipts (0049), Dividend and Profits(0050) and miscellaneous receipts in respectof General Services and Social Services andEconomic Services and Grants-in-aid fromCentral Government (1601).

19. Development and Non-DevelopmentExpenditure:- One of the usual methods ofpresenting Government expenditure is toclassify it into two categories, viz.Development Expenditure and Non-Development Expenditure. Expenditure ondebt services is separately shown and is notclassified either as Development or Non-Development Expenditure.

* The figures in bracket indicate the numbers of the relevantBudget heads.

290


20. Development Expenditure is broadly definedto include all items of expenditure that aredesigned directly to promote economicdevelopment and social welfare. In thispublication, while building up the estimatesof development expenditure on RevenueAccount, expenditure on budget headsunder groups Social Services and; EconomicServices, excluding Secretariat-Social Service(2251) and Secretariat economic services(3451), is treated as developmentexpenditure. Transfers to developmentalfunds spent on development activitiesprovided through Budget head under fiscalservices are treated as developmentexpenditure and are classified here underappropriate group headings. Budget headsincluded under Social Services andEconomic Services are given below.

21. Social Services:- Under this sector theexpenditure in the following sub-sectors arecovered. They are (i) Public Works (2059),(ii) Education, Sports, Art and Culture (2202to 2205), (iii) Health and Family Welfare(2210 and 2211), {iv) Water Supply,Sanitation, Housing and Urban Development(2215 to 2217), (v) Information andBroadcasting (2220 to 2221), (vi) Welfare ofScheduled Castes, Scheduled Tribes andother Backward Classes (2225), (vii) Labourand Labour Welfare (2230), (viii) SocialWelfare and Nutrition (2235, 2236 and2245) and (ix) Other Social Services (2252).

22. Economic Services:- Under EconomicServices are included activities and servicesmeant for economic development. These aredivided into following sub-sectors (i)Agriculture and Allied Activities (2401 to2435), (ii) Rural Development (2501, 2505,2506 and 2515), (iii) Special AreasProgrammes (2575), (iv) Irrigation and FloodControl (2701,2702, 2705 and 2711), (v)Energy (2801 and 2810), (vi) Industry andMinerals (2851 to 2853,2875 and 2885), (vii)Transport (3001,3051 to 3056 and 3075),(viii) Communications (3275), (ix) Science,Technology and Environment (3402 to 3435)

and (x) General Economic Services excludingSecretariat Economic Services (3452, 3454,3456 and 3475).

23. Non-Development Expenditure:- Thisincludes expenditure appearing undergeneral services except expenditure onPublic Works (2059). It includes expenditurepertaining to the general services renderedby the Government such as preservation oflaw and order, defence of the country andthe maintenance of the general organs ofthe Government. Following sub-sectors areincluded.

24. Organs of State:- This includes Budgetheads: State Legislature (2011), Governor(2012), Council of Ministers (2013),Administration of Justice (2014) andElections (2015).

25. Fiscal Services:- This includes tax collectionexpenditure classified by nature of Tax, viz.,(i) collection of taxes on income andexpenditure (2020), (ii) collection of taxeson property and capital transactions e.g.land revenue, stamps and registration andcollection of other taxes on property andcapital transactions (Budget heads 2029,2030 and 2035 respectively) and (iii)collection of taxes on commodities andservices e.g. State excise (2039), Sales tax(2040), Taxes on vehicles (2041) and othertaxes and duties on commodities andservices (2045). Transfers to developmentalfunds are excluded arid expenditure underother fiscal services (2047) is included.

26. Administrative Services:- This includesBudget heads 2051 to 2058 and 2070dealing with law and other general servicesrendered by Government and include publicservice commissions, Secretariat – GeneralServices, District administration, Treasuryand accounts administration, Police, Jails,Supplies and disposals, Stationery andPrinting and other administrative services.

27. Pensions and Miscellaneous GeneralServices:- This includes Pensions and other

291


retirement benefits (2071) andMiscellaneous general services (2075).

28. Other Non-Development Expenditure:- Thisincludes expenses on Secretariat socialservices (2251), Secretariat economicservices (3451), Compensation andassignments to local bodies and panchayatiinstitutions (3604) and Materials andequipment (3606).

29. Debt Services:- Under this item, expensesof interest charges on different loans andother miscellaneous charges connected withthe management of loans, contributions to

sinking funds and “Other appropriations”etc. are included. Expenditure under Budgethead 2048 and 2049 is included here. Thisexpenditure is not treated as developmentor non-development expenditure but shownseparately.

30. For Capital Expenditure outside theRevenue Account, expenditure on all itemsexcept on the following heads is classifiedas development expenditure. The heads thatare excluded are: Appropriation to thecontingency fund (7999) and Capital outlayon printing and stationery (4058) and Otheradministrative services (4070).

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9. ESTIMATION OF SEASONAL FACTORS

9.1. IntroductionEconomic time series are generally found toexhibit regular, intra-year seasonal movementsaround its annual trend path. Such repetitiveseasonal variations can result from climaticconditions, production cycle characteristics,seasonal nature of economic activity, festivals,vacation practices, etc. While the seasonalvariations occur regularly, yet they may vary inmagnitude from year to year. From the policyperspective, information on seasonal factors of aneconomic variable is useful as it enables the policymaker to differentiate between the seasonalchanges and long-run changes in a variable andthereby design appropriate policy responses. Anarticle regarding monthly seasonal factors forselected economic and financial time series of theIndian economy is being regularly published inthe RBI Bulletin from 1980 onwards. This articlepresents the monthly seasonal factors of selectedeconomic/financial time series classified intomajor five groups, namely,

A. Monetary and Banking Indicators;B. Wholesale Price Index (WPI);C. Consumer Price Index for Industrial workers

(CPI-IW);D. Index of Industrial Production (IIP);E. External Trade.

The seasonal factors are being estimated usingthe X-12 auto-regressive integrated movingaverage (ARIMA) methodology. X-12 ARIMA is thesoftware for seasonal adjustment developed bythe US Census Bureau. It is an enhanced version

of the X-11 Variant of the Census Method IIseasonal adjustment programme. The proceduremakes multiplicative/additive adjustments of atime series and creates an output data setcontaining the adjusted time series andintermediate calculations.

The main source of these new tools is theextensive set of time series model buildingfacilities built into the programme for fitting theregARIMA models. These are regression modelswith ARIMA (Autoregressive Integrated MovingAverage) errors. More precisely, they are modelsin which the mean function of the time series(or its lags) is described by a linear combinationof regressors, and the covariance structure ofthe series is that of an ARIMA process. If noregressors are used, indicating that the mean isassumed to be zero, the regARIMA model reducesto an ARIMA model. There are regressors formodeling certain kinds of disruption in theseries, or sudden changes in level, whose effectsneed to be removed from the data before themethodology can adequately estimate seasonaladjustments. The regARIMA-modeling module ofX-12-ARIMA was adopted from the regARIMAprogramme developed by the Time Series Staffof Census Bureau’s Statistical Research Division.

9.2. Methodology

The X-12-ARIMA is developed following theoperation-flow diagram of Figure 9.1. This positsa regARIMA (linear regression model with ARIMAtime series errors) modeling subprogram that can

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Estimation of Seasonal Factors

provide forecasts, backcasts, and prioradjustments for various effects before the seasonaladjustment subprogram in the central box isinvoked. The final box in Figure 9.1 represents aset of post-adjustment diagnostic routines thatcan be used to obtain indicators of theeffectiveness of both the modeling and theseasonal adjustment options chosen. The modelingmodule of X-12-ARIMA is designed for regARIMAmodel building with seasonal economic timeseries. To this end, several categories of predefinedregression variables are available in X-12-ARIMA(for further details user may refer to the manualavailable at ‘htttp://www.census.gov/srd/www/x12a/). User-defined regression variables can also

be easily read in and included in models. Fora multiplicative model, Figure 9.2 describes X-12 process for computing seasonal factors.

X-12-ARIMA uses the standard (p d q) (P D Q)s

notation for seasonal ARIMA models. The (p dq) refers to the orders of the nonseasonalautoregressive (AR), differencing, and movingaverage (MA) operators, respectively. The (P D Q)

s

refers to the seasonal autoregressive,differencing, and moving average orders. The ssubscript denotes the seasonal period, e.g., s =12 for monthly data, or 4 for quarterly data.Great flexibility is allowed in the specificationof the ARIMA structures: any number of AR,

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MA, and differencing operators may be used;missing lags are allowed in AR and MAoperators; and AR and MA parameters can befixed at user-specified values. The specificationof a regARIMA model requires specification bothof regression variables to be included in themodel and also the type of ARIMA model forregression errors (i.e., the orders (p d q) (P DQ)

s). Specification of the regression variables

depends on user knowledge about the seriesbeing modelled.

For the user who wishes to fit customised timeseries models, X-12-ARIMA provides capabilitiesfor the three modeling stages of identification,estimation, and diagnostic checking. Identificationof the ARIMA model for the regression errorsfollows well-established procedures based onexamination of various sample autocorrelationand partial autocorrelation functions producedby X-12-ARIMA. Once a regARIMA model hasbeen specified, X-12-ARIMA will estimate itsparameters by maximum likelihood using aniterative generalised least squares (IGLS)algorithm. Diagnostic checking involves estimationof residuals from the fitted model for signs ofmodel inadequacy.

The major improvements in X-12 ARIMA are newmodeling capabilities using regARIMA models,sliding spans diagnostic procedure, ability toproduce revisions history of a given seasonaladjustment, several new outlier detection optionsfor the irregular component of the seasonaladjustment, etc. RegARIMA is a linear regressionmodel with ARIMA that can provide forecasts andprior adjustments for various effects. X-12 ARIMAuses regARIMA models to preadjust a series byremoving effects such as outliers, etc., before theseasonal adjustment program is invoked.

9.3. RegARIMA

Let B denote the backshift operator, Byt = y

t-1.

X-12-ARIMA can estimate regARIMA models oforder (p d q)(P D Q) s for y

t. These are models of

the form

(1)

where ‘s’ is the length of the seasonal period,s = 4 or 12. The polynomials φ

p (z), Φ

P (z), θ

q (z),

ΘQ

(z) with degrees p; P; q; and Q respectively haveconstant terms equal to one. These polynomialsare constrained so that the zeroes of θ

q(z) and

ΘQ(z) have magnitudes greater than or equal to

one, so that the zeroes of φp(z) and Φ

P(z) have

magnitudes greater than one. Because ‘at’ is

assumed to be a sequence of independentvariables with mean ‘0’ and constant varianceσ

a2 , it follows from these constraints that

(2)

is a covariance stationary time series thatsatisfies the difference equation

(3)

Consequently, we can re-express the model (3)for y

t as,

(4)

This is a regression model with stationary ARMAerrors w

t for suitably differenced y

t. Its regressors

result from applying the same differencingoperations to the x

it. The model (6), together with

an assumption that the innovations at in themodel for w

t are i.i.d N(0, σ2 ), determine the

likelihood function that is maximized to estimatethe regression coefficients β

i , σ2, and the

coefficients of φp (B), Φ

P (Bs), θ

q (B), and Θ

Q (Bs). The

default likelihood in X-12-ARIMA is the fullyexact Gaussian likelihood.

In model estimation, any of the ARMA coefficientscan be held at fixed values, such as zero. Theprogram produces asymptotic standards errors,correlations, and t-statistics for the estimatedcoefficients as well as confidence intervals forforecasts.

Following are the different types of regressorsused in RegARIMA:

1) Constant term (for stationary variable i.e.,if the ARIMA model does not usedifferencing) represents the mean of the(stationary) series provided there are noother regression variables in the model.

2) Trend term captures the deterministic trendpresent in the data. The polynomial trendterm reduces to a constant term afterdifferencing.

3) Fixed seasonal regressors can be in one ofthe following category:

a) 11 contrasts in the 12 indicator variables.

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b) 11 variables taken from the Fourierseries representation of a fixed monthlypattern.

4) X-12 ARIMA provides four other types ofregression variables to deal with abruptchanges in the level of a series of atemporary or permanent nature: additiveoutliers (AOs), level shifts (LSs), temporarychanges (TCs) and ramps. AOs affect onlyone observation in the whole series andhence this effect is removed by a dummyvariable, which takes ‘0’ at break and ‘1’for other period. LSs increases or decreasesall observations from a certain time pointonward by some constant amount, this LSeffect is removed by introducing a dummyvariable which takes value ‘-1’ for all thetime point up-to the break point and ‘0’for all the time points afterwards. TCs allowfor an abrupt increase or decrease in thelevel of the series that returns to itsprevious level exponentially, this effect iscaptured by a variable which takes value‘0’ for all observation before the changepoint and α

t (O<α<l) thereafter. Ramps allow

for a linear increase or decrease in the levelof the series over a specified time interval(say t

0 - t

1). Ramps are smoothed out by

introducing a variable which take, threevalues ‘-1’ for time t<t

0, (t-t

0)/((t

1- t

0)–1) for

t0

< t <t1, and ‘0’ after the time point t > t

1.

In the default procedure, appropriate AOand LS regressors are fit at (almost) all timepoints of the series (or of a chosensubspan), and their corresponding t-statisticsare compared against specified criticalvalues. Such large critical values areappropriate because of the large numberof regressors to which individualsignificance tests are applied.

9.3. Diagnostic CheckingDiagnostic checking of a reg- ARIMA model isperformed through various analyses of theresiduals from model estimation, the objectivebeing to check if the true residuals appear to bewhite noise – i.i.d. N(0,σ2). (Note: Normality of thea

t’s is not needed for large sample estimation and

inference results; it is most important for validityof prediction intervals produced in forecasting).The check spec is used to produce variousdiagnostics statistics using the residuals from thefitted model. To check for autocorrelation, X-12-ARIMA can produce ACFs and PACFs of the

residuals (with standard errors), along with Ljungand Box (1978) summary Q-statistics. X-12-ARIMA can also produce basic descriptivestatistics of the residuals and a histogram of thestandardised residuals.

An important aspect of diagnostic checking oftime series models is outlier detection. Theoutlier spec of X-12-ARIMA provides theautomatic detection of additive outliers (AOs),temporary change outliers (TCs) and level shifts(LSs). X-12-ARIMA’s approach of outliersdetection involves computing t-statistics forsignificance of each outlier type at each timepoint, searching through these t-statistics forsignificant outlier(s), and adding thecorresponding AO, LS, or TC regressionvariable(s) to the model.

A seasonal adjustment that leaves detectableresidual seasonal and calendar effects in theadjusted series is usually regarded asunsatisfactory. Even if no residual effects aredetected, the adjustment will be unsatisfactoryif the adjusted values (or important derivativestatistics, such as the percent changes from onemonth to the next) undergo large revisions whenthey are recalculated as future time series valuesbecome available. Frequent, substantial revisionscause data-users to lose confidence in theusefulness of adjusted data. Indeed, suchinstabilities in the adjustments should cause theproducers of adjustments to question theirmeaning. Unstable adjustments can be theunavoidable result of the presence of highlyvariable seasonal or trend movements in theseries being adjusted. X-12-ARIMA includes twotypes of stability diagnostics, sliding spans andrevision histories.

The sliding spans diagnostics display, andprovide summary statistics for, the differentoutcomes obtained by running the program upto four overlapping subspans of the series. Foreach month that is common to at least two ofthe subspans, these diagnostics analyze thedifference between the largest and smallestadjustments of the month’s datum obtained fromthe different spans. They also analyze the largestand smallest estimates of month-to-monthchanges and of other statistics of interest. Theyimprove upon, or complement in important ways,earlier diagnostics for (i) determining if a seriesis being adjusted adequately, (ii) for decidingbetween direct and indirect adjustments of anaggregate series, and (iii) for confirming option

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[The whole User Manual “X-12-ARIMA Reference Manual” is available at ‘htttp://www.census.gov/srd/www/x12a/]

choices such as the length chosen for theseasonal filter or showing that other optionchoices must be tried.

The second type of stability diagnostic in X-12-ARIMA considers the revisions associated withcontinuous seasonal adjustment over a periodof years. The basic revision calculated by theprogram is the difference between the earliestadjustment of a month’s datum obtained whenthat month is the final month in the series anda later adjustment based on all future dataavailable at the time of the diagnostic analysis.Similar revisions are obtained for month-to-month changes, trend estimates, and trendchanges. Sets of these revisions, calculated overa consecutive set of time points within the series,are called revisions histories.

9.4. ForecastingFor a given reg ARIMA model with parametersestimated by the X-12-ARIMA programme, theforecast spec will use the model to compute pointforecasts, and associated forecast standard errorsand prediction intervals. The point forecasts areMinimum Mean Squared Errors (MMSE) linearpredictions of future y

t ‘s based on the present

and past yt ‘s assuming that,

i) the regARIMA model form is correct,

ii) the correct regression variables have beenincluded,

iii) no additive outlier or level shifts will occurin the forecast period,

iv) the specifed ARIMA orders are correct, and

v) the parameter values used (typicallyestimated parameters) are equal to the truevalues.

These are standardised assumptions, thoughobviously unrealistic in practical applications.What is more realistically hoped is that theregARIMA model will be a close enoughapproximation to the true, unknown model for theresults to be approximately valid. Two sets offorecasts errors are produced. One assumes thatall parameters are known. The other allows foradditional forecast error that comes for estimatingthe regression parameters, while still assumingthat the AR and MA parameters are known.

If the series is transformed, the forecasting resultsare first obtained in the transformed scale, and

then transformed back to the original scale. Forexample, if one specifies a model of form (1) for y

t

= log(Yt ), where Y

t is the original time series, then

yt is forecasted first, and the resulting point

forecasts and prediction interval limits areexponentiated to produce point and intervalforecasts in the original (Y

t ) scale. The resulting

point forecasts are MMSE for yt = log(Y

t ), but notfor Y

t , under the standard assumptions

mentioned above. If any prior adjustments aremade, these will also be inverted in the process oftransforming the point forecasts and predictioninterval limits back to the original scale.

If there are any user-defined regression variablesin the model, X-12-ARIMA requires that the usersupply data for these variables for the forecastperiod. For the predefined regression variablesin X-12-ARIMA, the programme will generate thefuture values required. If user-defined prioradjustment factors are specified, values for theseshould also be supplied for the forecast period.

9.5. Limitations

Some of the limitations of X-12-ARIMA procedureare listed below:

1. Observations (data) from a time series tobe modeled and / or seasonally adjustedusing X-12-ARIMA should be quantitative,as opposed to binary or categorical.

2. Observations must be equally spaced intime, and missing values are not allowed.

3. X-12-ARIMA handles only univariate timeseries models, i.e., it does not estimaterelationships between different time series.

4. The set of automatically identified outlierscan change if the regressor set or ARIMAmodel type is changed.

5. Regressors with t-statistic values just belowthe critical values can have their t-statisticsincrease above the critical values as newdata are added to the series over time.Conversely, regressors can drop out of theset of identified outliers as new data areadded. The printed output of X-12-ARIMA’sautomatic-outlier-identification option listsmonths whose AO or LS regressors are closeto the critical values. This is done to enablethe user to consider in advance whether toinclude such regressors in subsequent runsof the program.

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