Demonetisation: Normalcy will return in 10 days, says SBI chief Arundhati Bhattacharya
A report published by the bank in March had indicated that scrapping the high-value currency notes was on the cards.
State Bank of India Chairman Arundhati Bhattacharya on Tuesday told Economic Times that it will take about 10 days for normalcy to return since the Centre’s decision to demonetise Rs 500 and Rs 1,000 notes. “We should be able to restore some amount of normalcy by then, but for every ATM to start dispensing in the way that they used to earlier, the finance Minister’s [two-week] timeline is absolutely realistic,” she said. “Another few days and the pain will be over, and it will be considered a big success.”
With regard to the belief that demonetisation will help bring down inflation, Bhattacharya said prices have a tendency of reducing if the demand drops. “That is why we believe that this [demonetisation] is disinflationary because there will not be unaccounted money chasing goods. It will be accounted for money,” the SBI chief explained.
Moreover, a research report published by the bank in March had indicated that demonetisation may have been on the cards. Authored by SBI’s chief economic adviser Soumya Kanti Ghosh and his teams, ‘SBI Ecowatch’ had highlighted the “unusual rise” in currency in the market, noting a 25% year-on-year increase in the April-January period of the 2015-16 financial year.
“Even the YoY growth in currency with public increased by 12.3% as of Jan 2016,” the report had said, adding that it “defies logic” and needed to be analysed. “This recent growth in currency with the public is quite puzzling because none of the indicators validates this growth, as nominal growth has collapsed.”
After Prime Minister Narendra Modi’s surprise announcement on November 8, banks and ATMs have been flooded with thousands of citizens seeking to exchange their now illegal tender and to withdraw new currency. The new Rs 2,000 notes were, so far, made available only at banks, but Secretary of Economic Affairs Shaktikanta Das had said on Monday that ATMs would begin dispensing the new denomination notes in a day or two.
The Bharatiya Janata Party-led government has faced tremendous flak from Opposition parties for the move to demonetise the high-value currency notes. The subject is expected to cause an uproar in the Parliament, where the month-long Winter Session will begin on Wednesday.