India’s foreign exchange reserves surged to a lifetime high of $545.038 billion in the week ended September 18. The week saw a rise of $3.378 billion in forex reserves, according to the weekly publication of RBI. The reserves had fallen by $353 million to $541.660 billion in the previous week. A rise of $3.943 billion to $501.464 billion in foreign currency assets is mainly attributed to the rise in overall forex reserves. Foreign Currency Assets (FCA) are the most important component of the RBI’s foreign exchange reserve and include assets like US Treasury Bills bought by the RBI using foreign currencies. However, the gold reserves fell by $580 million in the week.
Bank deposit rises
The RBI weekly supplement also showed that the value of bank deposits in India increased 12 percent on-year in the fortnight ended 11 September 2020, compared to 10 percent last year. The aggregate deposits in scheduled commercial banks rose by Rs 71,417 crore to Rs 142.48 lakh crore in the fortnight. Bank deposits are on a rising streak since the lockdown began in the month of March.
Bank deposits had risen by over Rs 2.8 lakh crore in three fortnights of the lockdown till May 8, while bank credit during the period fell by Rs 1.2 lakh crore, according to the previous data released by the RBI. This has added nearly Rs 4 lakh crore to the liquidity in the banking system by then.
Bank credit surges but growth remain subdued
Meanwhile, bank credit also rose by Rs 8,700 crore in the fortnight to Rs 102.25 lakh crore. However, the growth is nearly half of that in the last year. The bank credit surged 10.4 percent last year, compared to 5.3 percent now. Disruptions in the businesses and mounting uncertainty due to the rising number of infections have kept the bank credit subdued, even as the central bank has significantly cut the repo rate and linked it directly to retail loans.