 "RBI opens its vaults for banks to keep old notes")
With bank currency chests overflowing with old, banned notes, the Reserve Bank of India (RBI) said these specified bank notes (SBN) could be deposited at their offices.
These SBNs will remain in the vaults of RBI offices under whose jurisdiction they are located, under lock and key of the depositing banks till taken for examination, RBI said in its communication.
The massive accumulation of SBNs at branches of banks and currency chests had, it said, strained processing capacities and storage facilities.
For SBNs deposited, RBI will afford credit to banks’ current accounts with RBI. For any shortage, counterfeit notes and mutilated notes detected during processing, the value will be recovered from the bank.
Meanwhile, public-sector bankers said for a week, they’d faced huge pressure from the public demand for cash and the long queues to deposit old notes. The closure of automated teller machines for recalibration had added to the woes for both bank staff and customers. Now, however, the pressures had subsided, at least in metropolitan regions. The focus has shifted to the servicing needs in semi-urban and rural areas, where much of business transactions happen in cash.
Rating agency Moody’s said withdrawal of the demonetised currency should provide a strong impetus for greater use of the formal financial system for the intermediation of commercial transactions, especially in the retail segment.
Bank deposits will initially increase by 1 to 2%. Currently, banks are having significant inflow, as customers deposit their existing holdings of the demonetised notes, to continue until end-December. As cash availability increases and the current restrictions on withdrawals expire, a moderation in the deposit base will occur.
Demonetisation, it said, might result in a reduction in lending rates, if part of the inflow stays within the banking system.
