Deposits fall for first time since note ban
Following the massive surge in deposits after demonetisation was announced on November 8, banks saw their aggregate deposits falling for the fortnight to December 23, according to Reserve Bank of India (RBI) data.
For the fortnight to December 23, deposits collected by banks stood at ~1,05,16,237 crore, down by 0.7 per cent compared with ~1,05,91,313 crore collected during the fortnight ended December 9, RBI said on Thursday.
During the fortnight ending November 25, deposits at banks had soared to ~1,05,17,719 crore from ~1,01,14,803 crore on November 11. Banks were flush with deposits after the government scrapped the old high-denomination notes worth ~20.51 lakh crore, constituting over 86 per cent of the currency in circulation.
The country’s largest lender, State Bank of India, collected an incremental net deposit of ~1.65 lakh crore between November 10 and December 30, which pushed up its current account savings account (Casa) deposits by 478 basis points, the bank’s Chairman Arundhati Bhattacharya had said earlier this week.
In the fortnight to December 23, bank credit as a whole grew marginally by 0.12 per cent to ~73,48,058 crore against ~73,39,116 crore in the fortnight ended December 9, RBI data showed.
This came after a massive fall in credit offtake throughout November. For the fortnight to November 25, bank credit fell ~61,000 crore, or 0.8 per cent.
This plunge in bank credit came after another ~59,000crore dip in the previous fortnight to November 11.
But at the same time, the note ban also had a positive effect, as borrowers, including some default accounts, paid back as much as ~66,000 crore during the same period. In sharp contrast, during the same fortnight of November 23, banks got huge inflows as people deposited as much as ~4.03 lakh crore into their accounts, which as of December 9 crossed ~12 lakh crore.
The outstanding credit of the banking system stood at ~72.92 lakh crore as of November 25, according to RBI data. The year-on-year credit growth was just 6.6 per cent, down from 9.3 per cent from a year ago.