One Year Post DeMo: Bankers Say Note Ban Has Been Good For Them A banker counting old banknotes during demonetisation (Parveen Kumar/Hindustan Times via Getty Images)

A few days prior to the first anniversary of demonetisation (8 November), bankers said today (6 November) that the move was good for them as it resulted in higher deposits and pushed digitisation at a faster pace. On 8 November last year, the Narendra Modi-led government demonetised Rs 500 and Rs 1,000 notes as part of its drive against black money, counterfeit notes and corruption.

"For the banking sector, I would consider it positive as lots of money has come into the formal banking system. Casa (current account, savings account) deposits have gone up by minimum 250-300 basis points which itself is a big positive," SBI chairman Rajnish Kumar said. Deposits, which came into the banking sector left banks with trillions of rupees in surplus funds, leading to an overall decline in money market rates.

ICICI Bank chief executive Chanda Kochhar said the note ban led to formalisation of financial savings and increased the flow of funds to mutual funds and insurance. "Post-demonetisation, there was a faster shift towards digitisation. Going forward, the whole approach towards digitisation will continue," Kochhar said.

Although some analysts and a section of people in the government had initially claimed that the move would lead to a windfall gain of at least 20 per cent of the Rs 15.87 trillion (Rs 15.87 lakh crore) of banknotes cancelled, the Reserve Bank of India (RBI) in June said as much as 99.1 per cent of the junked bills had returned to the banking system.

This led to widespread criticism of the move with opposition parties planning to organise protests on the first anniversary of demonetisation as "black day".

Formalisation of financial savings will increase the ability of banks and other players to reach out to small customers, Kochhar said.

Kumar said that post-note ban and the roll out of the Goods and Services Tax (GST), some sectors have seen improvement but there are certain segments which need to see more action.

The last one year has seen a tremendous improvement as far as the steel sector is concerned, he said. PTI

An Appeal...

Dear Reader,

As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.

Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.

We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.

Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.

Become A Patron
Become A Subscriber