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LATEST NEWS UPDATES | Cash still the king. Cash savings highest in a decade -Gayatri Nayak

Cash still the king. Cash savings highest in a decade -Gayatri Nayak

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published Published on Sep 2, 2018   modified Modified on Sep 2, 2018
-The Economic Times

Demonetisation seems to have had no impact on cash savings by the Indian household, Savings are again going out of the banking system with share of savings in form of cash touching decade high and that of deposits touching decade lows.

While currency in circulation is at Rs 19.38 lakh crore is much higher than pre-demonetisation levels, household savings in form of cash and currency has surged to 2.8 per cent of national income, the highest in almost a decade. At the same time share of savings in bank and corporate deposits dipped to a decade low of 2.9 per cent.

After contracting in FY’17, cash savings by Indian household rose to 2.8 per cent of gross domestic national income(GDNI) in FY’18, according to the preliminary data released by the Reserve Bank of India.

Significantly, the currency in circulation is now much higher than the pre-note ban levels at Rs 19.38 lakh crore as of August 17,2018.

Clearly, the cash that had got converted as deposits with banks immediately after the note ban has gone back out of the banking system. The drop in interest rates has ended up with individuals shunning bank deposits with deposit growth in the banking system touching lowest in five decades in FY’18. The households’ share in savings in form of deposits shrank to 2.9 per cent from 6.3 per cent the previous year.

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The Economic Times, 30 August, 2018, https://economictimes.indiatimes.com/news/economy/finance/cash-still-the-king-cash-savings-highest-in-a-decade/articleshow/65598614.cms?utm_source=APPusers&utm


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