The banks have received immense cash flows in the last two weeks post the Demonetisation news. On account of this , the market afloats rumours that the RBI might soon announce many reforms. An interest rate cut along with a much awaited tax rate cut is likely to be announced. This will surely be a blissful news for Indians after tackling several shackles of Demonetisation: The massive currency crisis faced by the economy clubbed with baffling guidelines; new guidelines for a new day.
It is believed by several economists that the windfall doesn’t lead to an increase in the real income. However, the sudden windfall is likely to strengthen and transform the face of banks. The massive NPA’s(Non performing Assets) will be waived off and compensated in the form of Injected cash. By we say of incremental deposits, the banks have already collected a whopping sum of nearly 5.5 lakh crores. This amount is perhaps going to touch the levels of 9 Lakh crores in the near term, if the current pace of deposits continues .
As a matter of fact , over the Rs 14 lakh crore worth of Rs 500 and Rs 1,000 notes that have been banned (86 percent of the currency in terms of value), about Rs 3-4 lakh crores will not possibly return to the system under the current scheme ,thereby relieving RBI of its liability. This will bolster the profitability of RBI . Profit increase is likely to hike the dividend payout to the Central Government .
All India bank officers confederation, which represents 2.5 lakh officers from across banks, has demanded Reserve Bank of India (RBI) governor,Urjit Patel’s resignation on account of the choas observed in the Indian economy majorly because of unplanned demonetisation policies. It raises eyebrows on the independent character of the RBI chief. Urjit’s continued prolonged presence adds to the existing drama .
In his blog, Lawrence ‘Larry’ Summers, a former chief economist of the World Bank and ex-economic advisor to the US President said ,”This is by far the most sweeping change in currency policy that has occurred anywhere in the world in decades.”He also wrote, “The ongoing chaos in India and the resulting loss of trust in the government fortify us in this judgement.”
The consequences of incremental deposits is still ambigous and skeptical in the minds of all Indians. However, The single man show, Hon’ble Prime Minister Shri Narendra Modi knows it all .Unfortunately , he is not opening the cards yet. The disclosure of the policy objective is likely to end all chaos and complexities which is taking a heavy toll on every Indian’s life.
