From apprehension about serpentine queues outside banks to another debate on the need for demonetisation, withdrawal of Rs 2,000 notes from circulation triggered a flurry of reactions. But as the dust settles down, the move by the Reserve Bank of India seems to be delivering better results than demonetisation, since the implementation is a lot more organised.
Barely a month after the RBI's decision, the State Bank of India has released data showing how the withdrawal of Rs 2,000 notes could address the shortfall of deposits compared to credit growth at banks.
More cash flowing into bank accounts
At a time when deposit growth at banks was lagging behind the rise in borrowings, 85 per cent of Rs 2,000 notes coming back in the form of deposits could bridge the gap.
SBI also mentioned how the need to dispose of Rs 2,000 notes among customers, could boost loan repayment, and amp up consumer appetite.
Since Rs 1.5 lakh crore have been deposited at banks, this means that people spent Rs 60,000 crore over the counter to get the currency of lower denomination as change.
Precise compared to demonetisation?
The SBI also went on to describe the withdrawal of Rs 2,000 notes as a precision strike, which can also drive India's GDP growth up to 8.1 per cent in the first quarter of FY23.
Loan repayments will also be scaled up to Rs 92,000 crore thanks to the RBI's move, according to India's biggest government-owned lender.
Highlighting the role of digital payments, SBI mentioned that UPI has seamlessly replaced most of the currency in circulation.
