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SBI explains reason behind Rs 3.3 lakh cr deposit bulge, Rs 2.7 lakh cr deposit slump in Nov

SBI explains reason behind Rs 3.3 lakh cr deposit bulge, Rs 2.7 lakh cr deposit slump in Nov

SBI Ecowrap report says it may be difficult to find the exact reason behind such an unusual phenomenon, but it does pose questions on liquidity management or financial stability.

Dr Soumya Kanti Ghosh, Chief Economic Adviser of SBI, says it exhibits a shift in behavioural trend in customer "payment habits through digitisation". Dr Soumya Kanti Ghosh, Chief Economic Adviser of SBI, says it exhibits a shift in behavioural trend in customer "payment habits through digitisation".

SBI Research, in its latest report, has said all scheduled commercial banks' (ASCB) aggregate deposits "slumped" by Rs 2.7 lakh crore during the fortnight ended November 19, 2021 after seeing an "abrupt increase" by Rs 3.3 lakh crore during the previous fortnight ended November 5.

Terming such an increase in deposits and subsequent slump "quite a contrarian trend", SBI Ecowrap report said it may be difficult to find the exact reason behind such an unusual phenomenon, but it does pose questions on liquidity management or financial stability.

SBI Research report, compiled by Dr Soumya Kanti Ghosh, Chief Economic Adviser of SBI, said it exhibits a shift in behavioural trend in customer "payment habits through digitisation, and hence lower currency leakage and concomitant deposit bulge or both".

About the fortnightly increase of Rs 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," the report said.

On the deposit slump in the subsequent fortnight, SBI Research said equity markets have witnessed a large influx of new investors in the past few months even as bank deposits have decelerated.

"There was likely a large influx of deposits into the banking system for the fortnight ended November 5 in anticipation of a build-up in a rally in stock markets post-primary issuances of new-age companies and others," the report said.

It said, however, when such a rally did not materialise, the bulge in banking deposits slumped and almost 80 per cent of deposit bulge was withdrawn.

"Interestingly, the amount of money parked in fixed reverse repo window jumped from Rs 1.6 lakh crores to Rs 2.4 lakh crores on November 17 and has remained at such level since December 1," the report said, adding that the significant jump in digital transactions has also resulted in lower usage of cash in current fiscal and "ideally could also have resulted in a surge in deposits for the Diwali week," the report argued.

Meanwhile, ASCB's credit has increased by Rs 1.18 lakh crore (7.1 per cent year-on-year) during the fortnight ended November 5, which may be due to festive demands. However, it declined by Rs 1,157 crore during the fortnight ended November 19.

Also read: Propelled by UPI and QRs, mobile phone transactions see major boost in India: Worldline report

Published on: Dec 03, 2021, 11:15 AM IST
Posted by: Manoj Sharma, Dec 03, 2021, 11:13 AM IST