A person holds Rs.2,000 foreign money notes to get them exchanged at a bank.
| Photo Credit: SANDEEP SAXENA
About three-fourths of Indians are selecting to deposit the lately withdrawn ₹2,000 notes into bank accounts to this point somewhat than exchanging them for smaller denominations, with the development possible to boost bank deposits, bankers mentioned.
In May, the Reserve Bank of India (RBI) mentioned it could withdraw these high-value notes from circulation and permitted their change or deposit till September 30.
Exchange is barely permitted up to ₹20,000 per flip, whereas there is no such thing as a restrict on depositing the notes, which additionally earns curiosity.
When introduced, the worth of these notes in circulation was ₹3.6 trillion ($43.61 billion), the RBI mentioned.
Though the full quantum of notes deposited or exchanged to this point is just not out there, six private and non-private sector bankers Reuters spoke to mentioned over 80% of the notes acquired by them have been deposited into accounts.
State Bank of India – the nation’s largest lender – had acquired about ₹170 billion in worth phrases within the first week because the train started on May 23, a senior official mentioned.
Of this, ₹140 billion, or 82%, was deposited into accounts, whereas the remainder was exchanged, he mentioned.
Officials at Bank of Baroda, Union Bank of India and Bank of India additionally mentioned 80%-90% of the notes have been deposited, with out specifying the quantum they acquired.
The expertise at two massive non-public sector banks was related. All the bank officers declined to be recognized as they aren’t authorised to converse to the media.
Kotak Mahindra Bank acquired greater than ₹30 billion of the ₹2,000 notes until May 30, Virat Diwanji, group president and head of shopper banking mentioned.
Of this, 80%-85% has been deposited, with a “good majority” coming into present accounts, he mentioned.
The influx will possible push up bank deposit progress from the present 10.9% and cut back foreign money in circulation (CIC), which dropped to ₹365 billion within the week ending May 26, RBI information confirmed.
Some half of the decline in CIC may very well be attributed to the ₹2,000 notice change, mentioned Gaura Sen Gupta, India economist at IDFC FIRST Bank.
With 75% of the full notes being deposited by September, bank deposits might go up by ₹2.7 trillion, mentioned Dipanwita Mazumdar, an economist at Bank of Baroda.
The preliminary assumption is the general bank deposit base would improve by a minimum of ₹1.5 trillion, with SBI contributing 22%-25%, the SBI official mentioned.
