DeMo Effect: Deposits Grow Even After Rate Cuts by Banks
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.