score agency Moody's has said that demonetization might add between Rs 1 lakh crore to Rs 2 lakh crore to outstanding bank deposits. on the similar time bank deposit growth is predicted to be subdued in the 0.33 and fourth quarter because of demonetization.
A statement issued by way of the company stated that the government's decision to eliminate a high percentage of notes from circulation (demonetization) has resulted in a slowdown in financial task that weighed on demand for credit score amongst corporations and retail borrowers during Q3 FY2017.
The rating company mentioned that whereas deposits did surge as a result of demonetization a big a part of this is being withdrawn. general, banks' deposit base should see a sustainable increase of 1-2% on account of demonetization. given that the deposit base of banks on the time of demonetization was Rs a hundred lakh crore, the expected addition would be in the region of Rs 1-Rs 2 lakh crore.
"general, demonetisation has significantly impacted credit score demand and deposit growth, but the impact on asset high quality has been mixed, while retail payment programs -- akin to card transactions and cell wallets -- have benefitted," says Srikanth Vadlamani, a Moody's vp and Senior credit score Officer.
Moody's conclusions had been contained in its simply-launched record on its 15 rated banks in India, "Banks -- India: Q3 income highlight Pressures from Demonetisation; NPL traits blended". The Indian government announced its demonetization program on eight November 2016.
"looking ahead, whereas commentary from the banks factors to a upward push in task in January, it is nonetheless under the levels seen in October, and we expect the quarter ending 31 March 2017 to point out extra antagonistic tendencies; however the affect on asset quality from demonetization must be manageable for the banking sector," provides Vadlamani.
regardless of the slowdown increase in residence loans had been steady. furthermore, economic growth seems to be improving from demonetization, even supposing steadily, which should cushion the impression on the banks' general asset high quality, mentioned Moody's.
VISIT - Wealth Research
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