Contrary to lenders’ expectations, most of the money that moved into banks after demonetisation has stayed put. In addition, the accumulation to their deposit base continues at a steady base, data from Reserve Bank of India (RBI) show. On December 23, total deposits — time and demand — stood at Rs104.69 lakh crore; on June 9, the total value of demand and time deposits with the banking system stood at Rs105.78 lakh crore, up more than 1%. State Bank of India (SBI) chairman Arundhati Bhattacharya had observed in May that around 65% of the inflows during demonetisation were in the system. The government announced the withdrawal of high-value notes on November 8 and the window for banks to accept the demonetised Rs500 and Rs1,000 notes was between November 10 and December 31. Bankers had anticipated that up to 40% of the deposits that flowed in post November 10 would remain with them.
However, it would now appear, the deposits have been far more sticky. Over the past year or so, deposits have grown at a healthy pace, and the fortnightly growth (year-on-year) has rarely fallen below 10%. The post-demonetisation rate of growth has been above 10%. HDFC Bank deputy managing director Paresh Sukthankar had recently said that his bank had believed initially that about 30% or so of the one-time jump would remain. “Our sense is — and this is just a guesstimate — that it would be a little higher than that,” Sukthankar had said after the lender announced its results for Q4FY17. However, he added, there was no scientific way to try and arrive at what might have remained from the one-time flows linked to demonetisation.
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At the end of March, SBI’s total deposits stood at Rs20.45 lakh crore, marginally higher than the Rs20.41 lakh crore at the end of December. HDFC Bank held deposits worth Rs6.44 lakh crore at the end of March, up from Rs6.35 lakh crore at the end of December. ICICI Bank’s deposit base rose to Rs 4.9 lakh crore by March 31 from Rs 4.65 lakh crore at the end of December. Much of the incremental growth in current account and savings account (CASA) deposits is being seen in private banks. According to an analysis by Nomura, the increase in CASA in 2016-17 for the top six private banks has been more than 30%. The analysts noted that PSU banks reported an increase of 400 basis points in their CASA ratio 2016-17, which would help protect their margins. However they were adding just a third of the incremental CA.