Analysing money in Banking System over the past few months

This analysis is based on Money and Stock Measures Report provided by RBI on a monthly basis (links provided at the end)

Money in Banking System	In Billion Rupees	Change over previous month (in Billion Rupees)
May-16	104,550.10
Jun-16	105,089.50	539.40
Jul-16	105,899.70	810.20
Aug-16	106,448.30	548.60
Sep-16	111,653.70	5,205.40

Investigation shows the banking system (consisting of Deposit money of public, Time Deposits with Banks and Total Post Office Deposits) has received nearly 10 times more money amounting to 5205 billion or 5.2 Lac crores in September 2016 as compared to previous month.

Possible Explanations

1. Is this an annual pattern?

Possible Explanation : May be every year due to financial activity money in banking system goes up.
Conclusion: Doing the same analysis for last year data does not support this explanation.The deposit was only 386.1 Bn INR last year in September.

2015
Money in Banking System	In Billion Rupees	Change over previous month (in Billion Rupees)
Jul-15	96,931.40
Aug-15	97,454.00	522.60
Sep-15	97,840.10	386.10

2. Is this due to hike by pay commission?

Possible Explanation: May be the increase is due to arrears deposited by government due to hike by pay commission.

Conclusion: The deposit by government for arrears amount is estimated at 34,600 crores (as estimated by India Ratings and Research Private Limited). So even this explanation cannot explain the complete deposit increase.

Source : http://www.ibtimes.co.in/7th-pay-commission-salary-arrears-seven-months-credited-bank-accounts-pensioners-691960

How this calculation was done

RBI provides monthly report on the following parameters of money system

1. Currency with the public (which in simple terms is the cash You and I transact with)

2. Deposit money of the public

3. Time Deposits with Banks

4. Total Post Office Deposits

I have arrived at money in Banking system using following formula

= Total Post Office Deposits + Time Deposits with Banks + Deposit money of the public - Currency with the public

In short add all deposits with Bank and post office and subtract currency with public.

Source :

https://m.rbi.org.in/Scripts/BS_ViewBulletin.aspx

Refer Section 6. Money and Stock Measures pdf report for month of July, August, September, October, November 2016.