The last ten days have been very eventful with the demonetising of the Rs. 500 and Rs. 1,000 notes. It will take time to gauge the exact extent of the effects; however, it cannot be denied that the action will have far-reaching and long-lasting implications for the Indian financial sector.
Paper is out, plastic is in! Get a Credit Card.
Over the last ten days, banks have recorded additional deposits worth more than Rs. 3,00,000 crore. As more cash enters the formal banking system, more transactions will be recorded. This, coupled with the drastic nature of the action, that is slated to make people rethink before transacting in black again, means that the quantum of illicit money floating around in the economy stands to be reduced. And this is a great thing for the Indian economy.
Additional Reading: Got A Bulk Of (Legit) Cash To Exchange? Here’s What You Can Do
On a wider note, the move has brought to fore many of the ideas that BankBazaar as an organisation holds close. The demonetisation is a step in sync with the company’s efforts to make the Indian financial system more digital and responsive. It has pushed the cause of paperless in a big way. Today, more and more people are looking at ways to transact cashlessly – be it through cards, wallets, or UID.
With the scope for illegitimate transactions involving cash coming down, people are looking to park funds in legitimate investments that provide high returns to the tune of 15-18% CAGR, comparable with real estate investments. As equity comes across as the best way to derive such returns and Mutual Funds are the safest way to invest in equity, MFs stand to get a good boost.
Additional Reading: Currency Demonetisation To Impact The Real Estate Sector
Since banks are flush with funds to lend, an increase in loan volume and reduced interest rates are expected. Deposit rates across segments have dropped by as much as 0.25—1% and lending rates are set to fall too. This will be an impetus for people to opt for loans and invest in property, which creates a favourable environment for BankBazaar, due to increased demand for loans and Credit Cards. As an organisation, this gives us a lot of entry points to connect with our customers and ease their financial journey.
Check This: Fixed Deposit Interest Rates
It cannot be denied that there have been short-term difficulties. However, the intent behind the move – to identify and eliminate black money and make transactions more paperless and transparent – is something that every one of us relates to.
Cheers to a country that’s going #cashless!
Additional Reading: Time To Go Cashless!