Demonetization is a tool to battle Inflation, Black Money, Corruption and Crime, discourage a cash dependent economy and help trade. Its policy of the government by banning Rs. Hereby analyzing the impact of demonetization on Banking Sector. A study by Bhupal Singh and Indrajit Roy, RBI directors from the monetary policy department and department of statistics and information management, published in August this year showed that the excess deposits accrued to the banking system due to demonetisation range between Rs 2. If the period up to mid-February is taken into account to allow for some surge to taper off, excess deposit growth is in the range of 3. The liquidity boost resulting from the demonetisation announcement on November 8, has stayed with the banking sector a year after the event, helping banks reduce their high-cost deposits and boosting their current account and savings account CASA ratio.
Impact of demonetization on banks - Bankers' Club
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IMPACT OF DEMONETIZATION ON BANKING SECTOR
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Everyone is aware about the demonetization policy of the government by banning Rs. One can understand that it would have a pretty bad impact on SMEs, small traders, real estate, transport sector, consumer durable goods industry. Not only these sectors but it would major affect the rural areas business as over there, majority of the transactions are made in cash. The ban of Rs. Demonetization will affect the liquidity, but for a short term.