Ban on 500 and 1000 currency notes to increase bank deposits

Finance analyst Neeraj Bhagat, the founder of Neeraj Bhagat & Co., an Indian Chartered Accountancy firm serving various MNCs from across the globe with offices in New Delhi, Gurgaon, and Mumbai, has predicted that demonetization will increase bank’s deposits by a huge margin. The demonetization was done in an effort to stop the counterfeiting of the current banknotes alleged to be used for funding terrorism and for cracking down on black money in the country.

“This will also increase the lending activity because banks have a CRR (cash reserve ratio) to maintain and with more deposits they can do more lending. Credit (loans) will become easier and interest rates may come down. Thus, it will attract more foreign investments in near future. Further, the move will probably push down property prices, including land prices as investors will not be able to utilize their cash in real estate and thereby forcing builders to sell at lower prices. Greater transparency in Indian real estate sector will assist in improving the country’s image and attract more foreign investments,” he added.