State Bank of India Chairperson Arundhati Bhattacharya on Monday said deposit rates would be reconsidered and that the banking system was likely to return to normalcy by the end of February. Her statements came after the bank reduced lending rates by 0.9%, the highest cut in recent years. This comes after deposits surged, following the demonetisation of Rs 500 and Rs 1,000 notes.

Speaking to reporters at a briefing in Mumbai, Bhattacharya said banks have a significant amount of low-cost funds triggered by the demonetisation drive and that SBI will wait till restrictions are withdrawn in March before making a decision. She said, “But we expect 40% of that amount to stay with the bank.”

Bhattacharya said, “We want to give a very clear signal that we are open for business. There is demand in the economy and there should not be any uncertainty on this.”

On January 1, the State Bank of India had reduced its marginal cost of funds rate by 0.9% across all maturities. The step is expected to make home, auto, personal and other loans cheaper.

In his New Year’s Eve Address, Prime Minister Narendra Modi directed banks to prioritise the lower and middle classes. Banks have received an estimated Rs 14.9 lakh crore in old Rs 500 and Rs 1,000 currency notes since November 8, when the government launched its demonetisation drive against black money and corruption.