DeMo Ef­fect: De­posits Grow Even After Rate Cuts by Banks

The Economic Times - - Markets: Beating Volatility - Our Bureau

Mum­bai: De­mon­eti­sa­tion has re­sulted in a rise in de­posit growth at a time when banks have re­duced in­ter­est rates on term de­posits.

De­posits rose 13.9%, or .₹ 12.7 lakh crore, to .₹ 105 lakh crore against a 10% rise last year, ac­cord­ing data re­leased by the Re­serve Bank of In­dia.

“The sur­plus liq­uid­ity in the bank­ing sys­tem, cre­ated by de­mon­eti­sa­tion, will lower bor­row­ing costs and in­crease the ac­cess to credit. This will boost eco­nomic ac­tiv­ity with mul­ti­plier ef­fects,” said Arun Jait­ley, fi­nance min­is­ter, dur­ing the Union Bud­get speech on Wed­nes­day.

ON DE­POSITS

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