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RBI releases the Monthly Bulletin for August 2016
August, 11th 2016

The Reserve Bank of India today released the August 2016 issue of its monthly Bulletin. The Bulletin includes Third Bi-monthly Monetary Policy Statement for the Year 2016-17 by Dr. Raghuram G. Rajan, Governor, Reserve Bank of India, Speeches by the Top Management, an Article on Flow of Funds Accounts of the Indian Economy: 2014-15 and Current Statistics.

Flow of Funds Accounts of the Indian Economy: 2014-15

The Flow of Funds (FoF) accounts, compiled by the Reserve Bank of India, map instrument-wise financial flows between different sectors of the Indian economy on a whom-to-whom basis. This article presents the FoF accounts for the year 2014-15. The sectoral classification of the economy has been aligned with the United Nations System of National Accounts, 2008 from 2011-12, the earliest year for which national accounts under the new series are available. The salient features of the article are as under:

Overall Financial Liabilities

  • Total liabilities issued by all sectors declined steadily from over 60 per cent of Net National Income (NNI) at current prices in 2011-12 to about 53 per cent in 2014-15.

  • The combined share of private non-financial corporations (PvNFCs), deposit taking financial corporations other than the Reserve Bank of India and the Central Government in total liabilities also declined from 43 per cent in 2011-12 to 32 per cent in 2014-15.

  • The share of other financial corporations, the rest of the world (ROW) and state governments rose to 15 per cent in 2014-15 from 7 per cent in 2011-12.

Financial Resource Gaps in 2014-15

  • The financial resource gap of private non-financial corporations declined during 2014-15 on account of reduction in operating expenses on the back of low international commodity prices and muted capital expenditure in the lacklustre business environment.

  • The financial resource gap of central public non-financial corporations also narrowed on account of a decline in capital expenditure.

  • A moderation in the financial resource gap of the General Government sector in 2014-15 essentially reflected improvement in finances of the Central Government, while there was an expansion in the resource gap of State Governments due to an increase in capital outlays and some categories of revenue expenditure.

  • Ultra-accommodative monetary policy stances in advanced economies, easing of norms for foreign direct investment and improved perceptions about the Indian economy resulted in substantial financial inflows from the rest of the world.

  • The financial surplus of the household sector remained broadly unchanged.


  • Currency and deposits continued to be the most preferred financial instruments during 2014-15, even as debt securities gained importance.

  • For the household sector, the share of deposits moderated during 2014-15, partly in response to the reduction in term deposit rates, while the shares of life insurance, investment in mutual funds and currency holdings increased during the year.

FoF accounts comprise nine Statements: Statements 1 to 5 contain data on instrument-wise FoF accounts for each of the five institutional sectors; Statements 6.1 to 6.4 summarise the annual inter-sectoral flows for the years 2011-12 to 2014-15; Statements 7.1 to 7.4 summarise instrument-wise financial flows for each year separately; Statements 8.1 to 8.3 summarise financing of other non-financial corporations, general Government and households; and Statements 9.1 to 9.6 present sectoral composition of net financial liabilities and assets of rest of the world, other depository corporations and other financial corporations, respectively.

Alpana Killawala
Principal Adviser

Press Release : 2016-2017/373

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