Rs 2,000 Note Exchange: Withdrawal to boost consumption, deposits, loan repayment says SBI report

State Bank of India has said that the withdrawal of Rs 2,000 notes might boost the consumption, bank deposit and repayment of loans along with the overall economic growth. The report further said that the consumption demand may be boosted by Rs 55,000 crore.

“One of the major benefits of withdrawal of Rs 2000 note might be the immediate uptick in consumption demand. As per our estimate consumption demand may be frontloaded by Rs 55,000 crore,” the SBI report said.

The report foresees an uptick in sales of consumer durables and boutique furniture. "Around Rs 55,000 crore could be withdrawn by public from ~Rs 92,000 crore saving bank deposits to be made cumulatively through Rs 2000 notes. This should give consumption boost along with increasing the velocity of money,” the report said.

The bank also said that though RBI's decision to withdraw Rs 2,000 notes won't affect the liquidity, some amount would come into loan accounts increase bank deposits. SBI also highlights that there has been an increase in total deposits of Rs 3.3 lakh crore during the fortnight ended 2 Jun’23. The lender is expecting the current account savings account deposits to increase by Rs 1.5 lakh crore.

The Reserve Bank of India announced that Rs 2,000 note would be withdrawn from circulation as part of currency management a month ago on 19th May.