A key metric of profitability for Indian banks, lending margins, is set to get a boost as the nation’s decision to withdraw its highest-value currency note bolsters bank deposits.
The Reserve Bank of India’s move to withdraw the 2,000 rupees ($24) notes will lead to growth in deposits at banks and lower their cost of funds, according to a note from Axis Mutual Fund. The step could boost deposits by as much as 2 trillion rupees through the end-September deadline to exchange the notes, the asset manager said.
Read More : Indian Banks to Witness Profit Surge Following Bank Notes Withdrawal