The Reserve Bank of India on Friday released its annual report for the financial year 2021 - 2022. In this period, it has highlighted the performance of all areas regulated it: from monetary policy and regulation to money and markets.
The reports highlights the three major events shaping the course of the last financial year: the 'delta' wave, or the second wave of the COVID-19 pandemic led by the delta variant of the coronavirus in India, the 'omicron' wave and the start of the military conflict in Ukraine.
Here's five interesting data points from the report
The banknotes in circulation increased 9.9 percent in value from ₹28.26 lakh crores in 2020 to ₹31.05 lakh crores in 2021 and 5 percent in volume, from 12.4 thousand crores units 13.05 thousand crores units. This continued a trend of easy money by the central bank (as that by central banks around the world) to combat the COVID-19 pandemic which began in 2020.
This bump in banknotes was led by ₹500 banknote, rising from 3.86 thousand crore units in 2020 to 4.55 thousand crore units in 2021 in terms of volume. It consisted of ₹19.33 lakh crores (68.4 percent of circulation) to ₹22.77 lakh crores (73.3 percent of circulations) in 2020 and 2021 in terms of value.
The ₹2000 banknote continued its decline in value and volume, with the former falling from ₹4.90 lakh crores (17.3 percent of circulation) in 2020 to ₹4.28 lakh crores (13.8 percent of circulation) in 2021; the latter falling to 2.14 thousand crore units tin 2021 from 2.45 thousand crore units in 2020.
The ₹500 banknote was also the most counterfeited, with the number of fake notes detected doubling: from 39,453 notes in 2020-2021 to 79,669 notes in 2021-2022. Counterfeiting of the ₹2000 banknote also rose by half: from 8,798 pieces to 13,604 pieces.
The report said that the RBI will also adopt a graded approach to central-bank digital currencies, which it will adopt after a proof of concept (to see whether an idea can be applied) and pilots.
2. Credit and fraud
Bank credit in system increased 9.6 percent across year-on-year, with non-food credit growing even faster at 9.7 percent
Frauds in the banking system fell in terms of value, but rose in terms of volume. In 2020-21, 7,359 cases amounting to ₹1.38 lakh crores occurred, to 9,103 cases worth ₹60,414 crores.
Public sector banks have a lower share in terms of volume (3,078 or 33.8 percent of all frauds) than private banks (5,334 or 58 percent), but were two-thirds in value (₹40,282 crores or 66.7 percent).
3. Primary and secondary markets
Easy money and lower interest rates caused bull-run in the markets, with all primary secondary data reflecting so.
The private sector rallied ₹1,50,483 crores from the primary market of which ₹1,38,894 crores came solely from initial public offerings. The quantum of funds raised from IPOs rose 263 percent from ₹31,029 crores
Mutual funds also saw increased net mobilisations (that is net of redemptions) by nearly 15 percent, raising from ₹2.14 lakh crores to ₹2.46 lakh crores.
In the secondary market, the derivatives segment across both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) nearly or more than doubled:
- ₹350 lakh crores to ₹660 lakh crores on the BSE
- ₹6436 lakh crores to ₹16,952 lakh crores on the NSE
One of the biggest beneficiaries of the pandemic was digital payments, as social distancing and no-contact protocols influenced payments to become increasingly cashless.
In terms of value, digital payments grew 23.3 percent, from ₹1,414 lakh crore to ₹1,744 lakh crore. In terms of volume, it grew 64 percent from 4,37,445 crore transactions to 7,19,531 crore transactions.
Nearly 64 percent of all transaction in terms of volume came from the Unified Payments Interface (UPI), with 4,59,561 crores transactions; doubling from the last year which was at 2,23,307 transactions. The value of UPI transactions also doubled, from ₹41 lakh crore to ₹84 lakh crore.
Large ticket settlements through the Teal-Time Gross Settlement (RTGS) also grew nearly 11 percent in terms of value from ₹1,056 lakh crores to ₹1,286 lakh crores, and formed 73 percent of all digital payments.
5. Foreign direct investment
The largest source of foreign direct investment to India was Singapore, with and inflow of $15.9 billion, followed by the United States, with an inflow of $10.5 billion. Significant funds also came into India from the Maldives at $9.4 billion, followed by Netherlands, Switzerland and the Cayman Islands with $4.6 billion, $4.3 billion and $3.8 billion respectively.
In all, India received $58.8 billion as foreign direct investment, down marginally from the previous financial year at $59.6 billion.
$16.3 billion flew into manufacturing, $9 billion into computing, $6.4 billion in communication services and $3.9 billion in wholesale.
FDI is defined as foreign stakeholders establishing long-term and lasting economic interests in India (or any recipient country) by setting up and controlling enterprise. It is an important route for the inflow of skill, technology and capital.
The annual report can be seen here.
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