-Credit offtake has remained robust even amid the significant rise in interest rates, and global uncertainties related to geo-political, and supply chain issues
-Currency in circulation has declined less when compared to Rs 2000 notes deposits in banks
Mumbai, NFAPost: Bank deposits rose by Rs. 3.26 trillion to Rs. 187.02 trillion in the fortnight ended June 2, 2023 as money came back to the banking system following the Reserve Bank of India’s (RBI’s) decision to withdraw Rs. 2,000 note from circulation.
According to the RBI data, deposits had shrunk by Rs. 59,623 crore to Rs. 183.74 trillion in the previous fortnight ending May 19, 2023. The liabilities, meanwhile, rose 11.8 per cent on a year-on-year basis as of June 2, up from 9.3 per cent a year ago.
After announcing the monetary policy on June 8, 2023, RBI Governor Shaktikanta Das had said there was Rs. 3.62 trillion of ₹2,000 notes in circulation as on March 31, 2023. After the denomination was withdrawn, about Rs. 1.8 trillion of ₹2,000 notes had come back till then, which was roughly about half of Rs. 2,000 notes in circulation as on March 31, 2023.
Bank credit grew Rs. 1.14 trillion to Rs. 140.08 trillion in the reporting fortnight, with the credit portfolio rising 15.4 per cent on a YoY basis, up from 13.1 per cent a year ago, the RBI data showed.
Credit offtake has remained robust even amid the significant rise in interest rates, and global uncertainties related to geo-political, and supply chain issues. The growth has been broad-based across segments.
Credit growth is expected to be in sync with the country’s economic growth in FY24, according to rating agency CARE.
Withdrawal of Rs 2000 notes is win for real estate, gold, consumer durables
The withdrawal of Rs 2000 notes has seen throngs of customers flocking to malls, jewellery stores, petrol pumps, while real estate experts have seen a spurt in land deals and secondary market apartment sales.
On 19 May 2023, RBI decided to withdraw the Rs 2000 denomination banknotes from circulation. In value term, the share of 2000 denomination notes (Rs 3.62 lakh crore) was at 10.8% as on March 2023. As per RBI, around 1.8 trillion of Rs 2000-rupee notes have come back to the system.
Of this, around 85% /Rs 1.5 trillion has come as deposits and the rest are exchanged for other smaller denominations. A calculation by SBI Ecowrap shows that the seasonally adjusted decline in currency in circulation during the same period is only around Rs 90,000 crore.
This means that currency in circulation has declined less when compared to Rs 2000 notes deposits in banks (85% of Rs 1.8 lakh crore Rs 1.5 lakh crore). It has declined from Rs 34.78 lakh crore as on 19 May 2023 to Rs 34.08 lakh crore as on 9 2023, a decline of only around Rs 70,000 crore.
