The Sensex hit a four-month low after prime minister Narendra Modi demonetised high-value currency notes of Rs 500 and Rs 1,000 with effect from November 8 in a major clampdown on black money and counterfeit currency. Foreign investors continue to sell both equity and debt in the Indian market, pulling down the rupee against the dollar to a new low since August 28, 2013.
At a time when physical currency liquidity with citizens has declined after demonetisation, the interbank liquidity has shot up considerably.
As per RBI’s data, banks have received Rs 5.4 lakh crore from November 10 to 18 and people have withdrawn Rs 1.03 lakh crore either over the counter or through ATMs during the period.
Even Jan-Dhan bank accounts, which were opened for financial inclusion of the poor, have seen huge deposits of Rs 15,000 crore since demonetisation, which authorities apprehend may be laundered blackmoney.
There are around 25.5 crore Jan-Dhan accounts across the country.
With the bonanza in current account-savings account (CASA) deposits, banks are reducing their deposits rates across all tenors and lending rates are also likely to fall.