Impact of Demonetisation on Current Account and Savings Account (CASA) Ratio and Deposits of Indian Banks

Abstract

The Indian government's decision, taken on 8th November, 2016, of demonetising the high denomination currency notes created multifarious effects on the economy. The event was volatile and uncertain, and it brought in both positive and negative impact. All the sectors were directly or indirectly affected by the demonetization. However, the banking sector was affected to a greater extent because it played a crucial role in the entire process.

In the light of the above facts, this study broadly focuses on the impact of demonetization on 10 Indian banks, consisting of tive Public sector banks, viz. The State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB), Bank of India (BOI), Industrial Develooment Bank of India (IDBI) and five Private sector banks, viz. - Housing Development Financial Corporation (HDFC) Bank Ltd., Industrial Credit and Investment Corporation of India Ltd. (ICICI Bank), Yes Bank Ltd., Axis Bank Ltd., Kotak Mahindra Bank Ltd. in three major areas viz. CASA ratio, Total Deposits, and NPA (Non-Performing Assets).

lt compares which type of banks, whether public or private, utilised the opportunity and got more benefits through the process. The paper also tries to identify if there was any indication of demonetization before 8th November, 2016 through the collected data. Statistical tool ANOVA, with 95% contidence, is used to inter the results. Data have been taken from the quarterly audited financial statements for the period from June 2014 to September 2017.