Indian banks received an extraordinarily high deposits to the tune of Rs 3.03 lakh crore from September 16 through 30, it has been reported.
According to an article in Business Standard, it hasn’t happened since Jan 2001 that banks receieved so much money in a single fortnight. All of the money banks received from different sources was in time deposits, or deposits which couldn’t be withdrawn before an agreed date except in exceptional circumstances.
The pink publication also revealed that the Reserve Bank of India, the country’s central bank, also raised the Cash Reserve Ratio (CRR) to 100 percent on September 16, the date when the deposits started to spike.
CRR decides the minimum reserves that must be held a commercial bank. In this context, raising the CRR to 100 percent has been inferred to mean that the RBI was aware about the sudden spike in deposits.
The newspaper also reported that around Rs 1.2 lakh crore of the deposited money was withdrawn within a fortnight of September 14, another trend that was termed “unprecedented”.
Finance Minister Arun Jaitley reportedly brushed aside the sudden hike in deposits as “marginal spike”, dismissing allegations that the surge in bank deposits had something to do with scrapping of old currency notes. He reportedly attributed the deposit hike to ‘pay commission arrears being disbursed to bank accounts between August 31 and September 15.
State Bank of India (SBI)’s chairman Arundhati Bhattacharya, while speaking to a news channel, cited higher military pension payout on account of implementation of One Rank One Pension (OROP) scheme as another possible explanation for spike in bank deposits.
However, on making through calculations as to the scale of payouts from the pension scheme, pay commission arrears and host of other reasons, BS estimated that the deposits couldn’t have accounted for Rs 3 lakh crore in total.
Records from last 12 years revealed that average increase in deposits in September over the last 12 years is Rs 1 lakh crore, compared to 2.8 lakh crore hike witnessed this September.
In the wake of Prime Minister Narendra Modi’s announcement informing about scrapping 500 and 1000-rupee bank notes, Delhi chief minister Arvind Kejriwal cited similar records of spike in bank deposits to claim that BJP had informed its “friends” of the decision beforehand which had given them enough time to park their ‘black money’.
“From July to September, there had been a sudden jump in deposits of money in banks which clearly indicates that BJP had told all its friends much before the announcement of demonetisation by the PM. It is a huge scam,” Kejriwal said in a press conference on November 12.
Several financial experts have been quoted as calling the trend “disproportionate”, calling for an investigation into the matter.
“In my experience, whenever there has been a scale disproportionate to trend, it is a case for investigation,” ex-RBI board member Vipin Mallik was quoted as saying.