Explainer: Government and banks will benefit from 2000 notes being out of circulation, 3.62 lakh crore will be affected


Explainer: 2000 के नोट सर्कुलेशन से बाहर होने से सरकार और बैंकों को होगा फायदा, 3.62 लाख करोड़ पर होगा असर

Government and banks will benefit from 2000 note being out of circulation

Reserve Bank of India is going to withdraw another currency. This time this currency is none other than a 2000 rupee note. Which was brought in the last months of the year 2016 after note ban i.e. 1000 rupees and 500 rupees notes were closed. RBI has clearly said that 2000 rupee notes can be deposited in the bank account or can be exchanged. For this, time has been given from 23 May to 30 September. After which money will be deposited in the banks and there will be no shortage of any kind of liquidity. This is expected to benefit the government and banks a lot. This decision is expected to bring down the bulk lending rate for the government and corporates in the short term.

Deposit can be up to one lakh crore rupees

The Reserve Bank of India said in its decision that as of March 31, 2023, the value of Rs 2,000 notes in circulation was Rs 3.62 lakh crore, which is not visible in the banks. Treasury officials and analysts believe that around Rs 50,000 crore to Rs 1 lakh crore is expected to come into the system. Whose process is going to start from Tuesday. On the other hand, according to Gaura Sengupta, Economist of IDFC First Bank, last time when demonetisation took place, 30 to 40 per cent of the value of withdrawn notes were deposited in banks. If this formula is followed, then this time about Rs 1.4 lakh crore can be deposited in the form of Rs 2000 notes, which will be 0.8 percent of the total bank deposits. This will greatly benefit the banks.

RBI said, from May 23, banks will have to give these 5 information daily

Bond yield will fall

Due to the increase in bank deposits, there has been a decline in deposit certificates and treasury bill yields. A rapid decline is also being seen in short term government bond yields. According to a senior officer working with a foreign bank, we expect a 15 basis point drop in Certificate of Deposit rates, a 10 basis point drop in T-bill yields and a drop of about 5-7 basis points in short term government bond yields will decline.

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Time till 30 September

On Friday, after trading ended in Mumbai’s bond markets, the RBI said it was withdrawing Rs 2,000 notes from circulation. The public has time till September 30 to deposit these notes. Bankers said Rs 2,000 notes worth about Rs 50,000 crore were already with banks and it was likely that a part of the notes would be converted into denomination notes. According to ICRA’s Karthik Srinivasan, this decision will see an increase in the deposits of banks and the pressure of increasing the deposit rate will reduce. Because of which a decrease in the interest rate can also be seen in the short term.

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