12.28        ndian     onom
          Meanwhile, the government has infused three     ratio (CRAR) of the scheduled commercial banks
     tranches of capital into the banks (infused funds    (SCBs) was 13.9 per cent (it was 13.6 per cent
     go to the RRBs, too through the PSBs under           by March 2017)—largely due to an improvement
     whom they fall) upto March 2015:                     among the PVBs (private sector banks).
          (i) Rs. 12,000 crore infused during 2012–13
              in seven PSBs.                              stock of money
         (ii) Rs. 12,517 crore infused in 2013–14 in 8    In every economy it is necessary for the central
              PSBs.                                       bank to know the stock (amount/level) of money
        (iii) In 2014–15, the PSBs were recapitalised     available in the economy only then it can go
              with Rs. 6,990 crore. This capital infusion for suitable kind of credit and monetary policy.
                                                          Saying simply, credit and monetary policy of an
              was based on some new criteria— asset
                                                          economy is all about changing the level of the
              quality , efficiency and strength of the
                                                          money flowing in the economic system. But it
                                                          can be done only when we know the real flow of
        (iv) During 2015–16, the government               money. That’s why it is necessary to first assess the
              released Rs. 19,950 crore to 13 PSBs        level of money flowing in the economy.
              (Economic Survey 2015–16).
                                                               Following the recommendations of the Second
         (v) For the year 2016-17, the government         Working Group on Money Supply (SWG) in 1977,
              has announced a sum of Rs. 25,000 crore     RBI has been publishing four monetary aggregates
              for the purpose of recapitalising the PSBs  (component of money), viz., M1, M2, M3 and M4
              (Union Budget 2016–17).                     (are basically short terms for Money-1, Money-2,
        (vi) The Indradhanush scheme was launched         Money-3 and Money-4) besides the Reserve
              (in 2015-16) by the Government under        Money. These components used to contain money
              which the PSBs are to be infused with       of differing liquidities:
              Rs. 70,000 crore by March 2019 to           M1 = Currency & coins with people + Demand
              enable them meet the ‘global risk norms’              deposits of Banks (Current & Saving
              (i.e., Basel III norms).                              Accounts) + Other deposits of the RBI.
       (vii) The ongoing recapitalisation process         M 2 = M1+ Demand deposits of the post offices
              of the PSBs got a big boost when the                  (i.e., saving schemes’ money).
              Government announced (February 2018)        M = M1+ Time/Term deposits of the Banks
              a hefty sum of Rs. 2.11 lakh crores for               (i.e., the money lying in the Recurring
              it. Infused into the PSBs upto October                Deposits & the fixed Deposits).
              2019, a part of it (Rs. 1.35 lakh crores)
                                                          M = M3+ total deposits of the post offices (both,
              will be mobilised through Recapitalisation
                                                                    Demand and Term/Time Deposits).
              Bonds while rest of it (Rs. 76,000 crores)
                                                                Now the RBI has started50 publishing a
              will be raised by the banks from market
                                                          set of new monetary aggregates following the
              (disinvestment process) and budgetary
                                                          recommendations of the Working Group on Money
              support. This process will help the banks
                                                          Supply: Analytics and Methodology of Compilation
              in meeting their capital adequacy targets
                                                          (Chairman, Dr. Y. V. Reddy) which submitted
          As per the latest Economic Survey 2017-18,        50.  The working group was set up in December 1997 under
                                                                 the chairmanship of Y. V. Reddy (the then Deputy
     by September, the capital to risk-weighted asset
                                                                 Governor, RBI) which submitted its report in June 1998.