what is the effect of demonetization on savings and credit creation?
Answers
Answer:
Banks do not pay interest on the current account deposits and pays a very low% of interest on savings on account deposits. Hence, it is a good measures to get deposits at no or very low cost. Thus influences of demonetization are: Increase in Deposits: Demonetization has increased the deposits in Banks
Answer:
Explanation:
After banks, it's the turn of credit bureaus to go into overdrive as the list of defaulters is likely to get longer because of demonetization-induced cash crunch in the system. It is likely that many small borrowers and companies may default on their loan repayments, which in turn will affect their credit scores.
The negative impact of demonetization was felt across the all segments of economy, especially agriculture and industry. The worst impacted were segments that relied on high-volume cash transaction, such as organized and unorganized retail. The impact was felt at both the firm level as well as at the consumer level.