Note ban has and may continue to result in a slowdown: SBI

Post-demonetisation, there has been a surge in the CASA deposits of banks. As per a RBI report, the sharp increase in the share of CASA deposits in aggregate deposits to 39.30 per cent resulted in a reduction in the cost of aggregate deposits, and banks have correspondingly lowered their term deposit rates.

By: PTI | New Delhi | Published:June 11, 2017 11:27 am
SBI, demonetisation, note ban, demonetisation impact, demonetisation indian economy, demoentisation bank impact Preliminary Placement Document, SBI had said contains forward-looking statements that involve risks and uncertainties.

Country’s largest lender SBI has expressed apprehensions that demonetisation may continue to result in slowing down of the economy, and adversely affect its business. The government had discontinued Rs 500 and Rs 1,000 banknotes from November 9, 2016 and issued new Rs 500 and Rs 2,000 currency notes in exchange for the discontinued ones.

The long-term impact of this move on the Indian economy and the banking sector is uncertain, SBI told institutional investors prior to its Rs 15,000 crore share sale through private placement. The effects of India’s recent demonetisation decision are uncertain, which may adversely affect the bank’s business, results of operations and financial condition, the bank said in the Preliminary Placement Document to investors while flagging the ‘risk factors’.

“The demonetisation has and may continue to result in a slowing down of the Indian economy, which may adversely affect the Bank’s business,” it said. The document, SBI had said contains forward-looking statements that involve risks and uncertainties. Further, the financial performance may differ from “such forward-looking” statements as a result of certain factors.

Post-demonetisation, there has been a surge in the CASA deposits of banks. As per a RBI report, the sharp increase in the share of CASA deposits in aggregate deposits by 4.10 per cent to 39.30 per cent (as of February 17, 2017) resulted in a reduction in the cost of aggregate deposits, and banks have correspondingly lowered their term deposit rates.

As a result, the bank may face increased competition from commercial banks and other lending institutions, it said
while highlighting the risks associated with demonetisation. SBI said increased competition may have an adverse effect on the net interest margin and other income and if the bank is unable to compete successfully, its profitability may decline.

“The move could also result in an increase in compliance costs and higher incidents of fraud. Any one or more of these events, if and when they occur, could have a material effect on the bank’s business, results of operations, financial conditions as well as reputation,” the document said.

Post merger of five associate banks and Bharatiya Mahila Bank effective April 1, SBI catapulted into one of the top 50 global banks (up from 55th position in 2016). Its balance sheet size is Rs 33 lakh crore and has 24,017
branches and 59,263 ATMs servicing over 42 crore customers.

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  1. N
    NK
    Jun 11, 2017 at 10:57 pm
    The SBI lady was waxing lyrical about the great effects of DeMo. Cannot really blame her .She had to toe the line or be ousted. But in the end only the poor and middle cl suffered. The rich and the political cl was not affected. We must give up this sycophancy and look at facts and not be taken in by the spin.
    Reply
    1. Y
      yash sehgal
      Jun 11, 2017 at 5:32 pm
      When u make a lawyer a finance minister, this happens..Jaitly acan be a good advocate but he is the worst finance minister india has ever had or can have..he has imposed so many taxes that one cannot pay. Only two years r left in Loksabha elections. How Modiji wud balance this to win 2019 election wen people hv lost their business n jobs.
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        Parth Garg
        Jun 11, 2017 at 5:30 pm
        SBI should be ready for a strong retaliation. Heads would roll in a rule of autocracy.
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          AlsoIndian
          Jun 11, 2017 at 3:35 pm
          Now shall we call SBI as State Bank of Pk??? Everyone who tries to tell a truth in this country is subject to curse. If you are against Modi, BJP or Hindutva, they call you anti-national. Even a primary school kid has the worst of demonetisation. Every single India has suffered because of it. And we have not even a single good outcome of the w painful exercise that took several lives. And yes, the government has stopped singing the songs of self-praise on demonetisation and started new b ers. The government is spending all its efforts on creating news and propa a than real ground work and the corrupt media is potraying green images of Savan for the blinds.
          Reply
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            sunil
            Jun 11, 2017 at 3:17 pm
            The article should clearly spell the requirement of such forward looking statements are as per practice. Readers should keep in mind that such statements are extreme scenarios which may not even occur.
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            1. A
              Abdul
              Jun 11, 2017 at 2:58 pm
              First fire the chairperson - lady of SBI, who was all support for this monumental b er by Modi. People like her who support an individual against the larger interest of the nation is Anti National (Not Aunty National). Now what made the SBI come back and say about this? People should close their account with SBI and support other banks who has the guts to say the truth.
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              1. S
                sunil
                Jun 11, 2017 at 3:21 pm
                Please read RHP of any company when an IPO/FPO/placement is done.
                Reply
                1. T
                  Tushar
                  Jun 11, 2017 at 5:55 pm
                  Those who are hit by the monumental blast is small scale industrialists and many other small earning people .. Corporates are also effected but they won't disclose it now since they are singing melody in support of modi ... Their disaster will be exposed all of a sudden oneday like the crisis happened in 2008 n USA ..and those small earning people are not read RHP and FPO s dude ...they count the money and profit on daily basis mthey don't depend the graphic Aalysis
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                Rakesh
                Jun 11, 2017 at 2:23 pm
                Modi and Jaitley please answer
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                  Nirav
                  Jun 11, 2017 at 1:16 pm
                  SBI is anti -national. stani bank hai ...it should be renamed SBP...state bank of stan.
                  Reply
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                    bitterhoney
                    Jun 11, 2017 at 1:51 pm
                    All those who speak truth and don't deceive public are anti national and are stanis. And those who lie, hide facts, and deceive public are deshbhakt.
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                      Shyam Sunder
                      Jun 11, 2017 at 4:27 pm
                      Problem with SBI do ent is that it is to be placed in front of potential ins utional investors where it can not lie or hide the bitter facts.Jumlas work for leaders in public meetings of bhakts . In one or two days Government will SBI to withdraw it's Anti national, Anti progress statement. Watch out for verbal gymnastics which would have been really entertainmening if not so harmful and painful for country as in last 03 years
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