Liquidity of banks to improve as Rs 2,000 notes being deposited: Report
The liquidity in the banking system is expected to improve to more than Rs 1 lakh crore in days to come if the current market trend of 80 per cent of Rs 2000 notes being deposited holds, a report said.
"Even if a fraction of these trends are extrapolated at All Scheduled Commercial Bank's (ASCB) level, then the banking system liquidity is likely to increase significantly compared to our earlier estimates of Rs 1 trillion bulge in deposits," said the SBI report 'Ecowrap' said.
However, it said, this is based on the current available information and might change depending on further data.
The bottom line, however, is that the interest rate cycle might have peaked decisively, it said.
"As per market trends, around 80 per cent of the total Rs 2000 notes received are deposited and the rest 20 per cent are exchanged for smaller denominations," it said.
The Reserve Bank of India (RBI) on May 19 announced the withdrawal of Rs 2000 denomination banknotes as part of its currency management