For banks, Rs 2,000 note will be short-term liquidity support

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Margin margin, which is a key measure of profitability for Indian banking companies, recently touched Rs. The decision to withdraw the Rs 2,000 note is likely to be beneficial. According to sources, with this decision of RBI, banking companies facing tough competition for deposits will get easy growth in deposits. This in turn will have a positive impact on their net interest margin.

The country’s largest currency, Rs. After the decision to return Rs 2,000 notes, there will be an increase in deposits in banks. An executive of a top asset management company says this will bring down their cost of funds. According to his calculations, the Central Bank’s decision will result in the loss of banking companies to the tune of about Rs. The deposit amount will be Rs. 2 lakh crore can become the reason for development. That is, by the September 30 deadline set by the RBI, it is likely that the amount will be deposited in the banks’ accounts, the asset manager says. However, the next day after RBI’s decision, Rs. There was no hurry to deposit Rs 2000 notes.

During the last financial year, higher growth in net interest margin of banking companies was not witnessed due to lower growth in deposits against higher demand for credit. While this margin is likely to reduce by March 31. Since the demand for loans against deposits remains high and hence the competition for deposits among banking companies is intensifying, they have to offer higher rates. In May, Indian banks had Rs. RBI figures indicate deposits of Rs 18.4 lakh crore. However, an economist says that as the deadline approaches, there will be a rush to deposit higher denomination currency notes. Due to which there will be a significant increase in bank deposits in the second quarter. The effect of which can be seen on their third and fourth quarter results. Generally those who have Rs. 2000 notes will be deposited. They have to park it in the banks for some time and then take it back in pieces. Due to which banks will get a chance to use the money for some time. However, some amount will also be transferred to long term deposits. Banks will be able to take advantage of this for a long time. According to a top private bank official, the cheaper deposits in savings accounts will improve margins of banks and have a positive impact on their cost of funds.