economy

How bank deposits in India slumped after abrupt increase in alternate fortnights

How bank deposits in India slumped after abrupt increase in alternate fortnights

A recent report by State Bank of Indias (SBI) research team has highlighted a curious case of increase in aggregate bank deposits followed by subsequent slump in alternate fortnights, which is quite a contrarian trend. As per the provisional data released by RBI for the fortnight ended 19 November 2021, ASCB’s aggregate deposits have slumped by ₹2.7 lakh crore during the fortnight. This slump in deposits follows an abrupt increase by ₹3.3 lakh crore during the previous fortnight ended 5 November 2021. “While, it may be exactly difficult to decipher the increase and subsequent decline, it does poses questions on liquidity management/financial stability or a shift in behavioural trend in customer payment habits through digitisation and hence lower currency leakage and concomitant deposit bulge or both, said the report authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India. What the report says about the trend - First, the fortnightly increase of ₹3.3 lakh crore: This has never happened during a Diwali week as there is always a currency leakage and concomitant deposit decline. This is also the 5th largest increase in any fortnight in the last 24 years. Such huge incremental addition has happened only a few times, with higher deposits accretion. Next, the fortnightly deposit slump in the subsequent fortnight: The report said that it is possible that there was a large influx of deposits into banking system for the fortnight ended 05 November 21 in anticipation of a build up in rally in stock markets post primary issuances of new age companies and others. However, when such rally did not materialise, the bulge in banking deposits slumped and almost 80% of deposit bulge was withdrawn. Download.

economy 2021-12-03 Livemint