With the withdrawal of 2000 notes, the current year will also see an increase in the profits of banks

Conditions are favorable for banks as credit demand remains high amid low funding costs

Mumbai: Due to the decision to withdraw Rs 2000 notes, there is a possibility of seeing an increase in the income of the country's banks in the current financial year as well. In the last financial year, the accumulated profit of public sector banks crossed one lakh crore rupees. Banks have started exchanging notes of Rs 2000 from today.

Withdrawal of currency notes will increase note inflows in banks Large deposits will see a reduction in cost of funds of banks as deposits of Rs 2,000 notes will mostly come in current accounts, an analyst said.

Savings accounts and deposits have to pay interest to the depositors, but banks rarely have to bear such costs in current accounts. The interest rate on savings account remains relatively low. According to an estimate, an increase of two lakh crore rupees can be seen in the deposits of banks by the end of September.

According to the latest figures of the Reserve Bank, banks had deposits of Rs 18.40 trillion. Due to the recovery in the country's economy, credit demand is also increasing. When lending rates are currently high, in such a situation, the net interest margins of banks are likely to increase.

Last financial year, credit demand growth in the country was at an 11-year high. It is to be mentioned here that the consolidated profit of the public sector banks of the country crossed the Rs one lakh crore mark in the last financial year. In the financial year 2017-18, public sector banks made a loss of Rs 85390 crore.

Compared to the financial year 2021-22, the combined profit of 12 public sector banks has increased by 57 percent in the financial year 2022-23.

During the financial year 2016-17 to 2020-21, the government was forced to infuse capital of Rs 3.10 lakh crore in public sector banks. This pressure was due to the high proportion of NPAs.