The banks are gaining far more than they are losing due to demonetization. Isn’t it?

The banks are gaining far more than they are losing due to demonetization.

demonetization and banks What Kind Of Costs The Banks Are Incurring For The Work Created By Demonetisation?

  1. Banks were at a precarious position before demonetization. NPAs saddled the system and either the government put in the taxpayer money or some of the banks might not have been able to function. Now, without the exchequer capitalizing the system, banks got enormous amount of liquidity in.
  2. Normally bank managers would go and beg their big customers for deposits at various times. Now, the bank managers are getting deposits without moving from their chairs.
  3. Normally banks would go and scout for new account openings. Now, banks are getting a flood of new account openings. This improves financial inclusion as well as more business for the bank without again moving from the chair. demonetization after effects banks What Kind Of Costs The Banks Are Incurring For The Work Created By Demonetisation?
  4. In any healthy economy banks will be the central system through which almost all transactions take place. In India, banks were skipped in most transactions. Now that more people are using netbanking, cheques and other banking transactions they are getting a central place in their system. That means a lot of extra liquidity and profits.
  5. Once the dust settles, banks will have so much excess in cash that they can drop the interest rates. In parallel, a lot of the pawn brokers and parallel economy sources find it hard to lend any money. Together this will enable banks to get far more quality loans dispersed – once again without moving from their chairs.  What Kind Of Costs The Banks Are Incurring For The Work Created By Demonetisation?

In short, this is a huge bonanza for the banks and it is not the government that should pay for this huge spike in business that banks are getting. It is like saying we should feel sorry for PayTm because their servers are getting so much load now. I mean they are jumping up and down and same are the bank execs. Yes, some of their existing work is hindered and there is some loss of business, but those are easily compensated by the advantages they are getting.

Sure, the staff are overworked. You know what? Like Mr. Nagarajan Srinivas mentioned they have been overworked for years. It is an opportunity for the rest of the society to see their hard work.

By Balaji Viswanathan at quora

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