TRACK2 EFFECTS OF DEMONETIZATION IN BANKING SECTOR

Abstract

Demonetization is a tool to battle Inflation, Black Money, Corruption and Crime, discourage a cash dependent economy and help trade. Its policy of the government by banning Rs. 500 and Rs.1000 currency notes has influenced all almost all the corner of the economy. The liquidity boost resulting from the demonetization announcement on November 8, 2016 has stayed with the banking sector a year after the event, helping banks reduce their high-cost deposits and boosting their current account and savings account (CASA) ratio. This paper focus on the influences of demonetization such as Increase in Deposit, fall in cost of Funds: Demand for Government Bonds Sagginess in Lending and its impacts. How Demonetization crippled rural bank lending was explained in this article.