With about Rs 4 lakh crore coming into the banking system within a week after demonetisation, Moody’s Investors Service on Wednesday cautioned that banks’ deposit base will witness a ‘sharp decline’ as and when the current restriction on cash withdrawals eases. In a major assault on black money, counterfeit notes and terror financing, Prime Minister Narendra Modi had on November 8 announced demonetisation of Rs 500 and Rs 1,000 notes and asked holders of such bills to deposit them in banks.
Moody’s said the trend of significant inflows will continue for the next 3-4 weeks. “But, as cash availability increases and the current restrictions on cash withdrawals are lifted, sharp declines in the deposit base will occur in the near future,” Moody’s said.