Report Explains How Rs 2000 Withdrawal Will Supercharge India's Economy

The report said that the Rs 2,000 note withdrawal could result in 30% of the deposits or Rs 92,000 crore going to loan repayments

The State Bank of India (SBI) has released a report explaining how the recent withdrawal of Rs 2,000 notes could boost bank deposits, repayment of loans, and even the GDP of the country. The report said the withdrawal was a precision strike and suggested that UPI could be the new Rs 2,000 note. 

According to SBI, the share of Rs 2,000 notes in value terms was at 10.8% as on March 2023. Around 1.8 lakh crore of Rs 2,000 notes were returned to the system where 85% or Rs 1.5 lakh crore were received as deposits and the rest were exchanged for smaller denominations.

“Even as Rs 1.5 lakh crore of Rs 2000-rupee notes has been deposited at the banks …This implies that the amount spent/exchanged by people over the counter is ~ Rs 60,000 crore (Rs 1.5 lakh crores net of Rs 90,000 crore decline in currency in circulation ~Rs 60,000 crores) …this could also result in a bank deposit boost, repayment of loans boost, consumption boost, RBI retail CBDC boost and a possible GDP boost…,” the report stated.

The report said that the “precision” strike” “hits the right notes on multiple counts, taking pressure off substantially from near war-like quest for deposits from banking system while also smoothening the bias for higher interest rates going forward”.