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Unusual deposits of Rs 1.7 lakh cr made during demonetisation: RBI paper

According to the paper, aggregate deposits grew by 14.5% y-o-y during the period Nov 11 to Dec 30

Press Trust of India  |  Mumbai 

A woman holding old Rs 500 notes. Photo: Shutterstock
A woman holding old Rs 500 notes. Photo: Shutterstock

'Unusual' totalling Rs 1.6-1.7 lakh crore were made during the period, says a research paper posted on the RBI website.

In nominal terms, it said, the excess accrued to the system due to are estimated in the range of Rs 2.8-4.3 lakh crore.


"The 'unusual' deposit in specific accounts, which are usually less active, is estimated to be in the range of Rs 1.6-1.7 lakh crore," according to the paper, 'and Deposit Growth'.

Prime Minister Modi on November 8 had announced of Rs 1,000 and Rs 500 notes valued at Rs 15.4 lakh crore and constituting 86.9 per cent of the value of total notes in circulation in a major assault on black money, fake currency and corruption.

The paper is authored by Bhupal Singh and Indrajit Roy who are directors in the Monetary Policy Department and Department of Statistics and Information Management, respectively.

It said that excess deposit growth in the system during the period (November 11, 2016 to December 30, 2016) works out to 4.0-4.7 percentage points.

If the period up to mid-February 2017 is taken into account to allow for some surge to taper-off, excess deposit growth is in the range of 3.3-4.2 percentage points, it said.

"Considering some more temporal tapering of deposits, the exercise taken up to end-March 2017 reveals that excess deposit growth would be in the range of 3.0-3.8 percentage points," the paper said.

According to the paper, aggregate grew by 14.5 per cent (y-o-y) during the period November 11 to December 30, 2016, as against 10.3 per cent during the corresponding period of 2015.

Overall, there appears to have been a significant increase in due to demonetisation, the paper said, adding, "which if sustained, could have favourable impact on financial savings and their channelisation to capital markets."

A separate research paper titled 'Financialisation of savings Into non-Financial Intermediaries' said that appears to have led to an acceleration in the financialisation of savings.

The research paper is authored by Manoranjan Dash, Bhupal Singh, Snehal Herwadkar and Rasmi Ranjan Behera; all work at Reserve of India (RBI).

The paper also pointed out that in parallel, there is a shift towards greater formalisation of the economy in the near term aided by the introduction of Goods and Services Tax (GST) and regulations such as the Real Estate (Regulation and Development) Act, 2016 (RERA) and the Benami Transactions (Prohibition) Amendment Act, 2016.

"These developments may also incentivise greater shift from physical to financial savings," it said.

First Published: Fri, August 11 2017. 19:33 IST