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  • Category: Miscellaneous

    Why people are not depositing their money in banks?

    Recently RBI has estimated 19.5 lakhs crores of rupees are in circulation after demonetization. But out of this currency it is estimated 17.5 lakhs crores rupees currency with people. Only 1.5 lakhs crores rupees of currency with bank deposits.This means people are not at all interested to deposit their money in banks but they are interested to store this money in homes. Economic experts say it is not good for the economy. This situation makes difficult for the banks to keep money in ATM's. The reason for this situation is, people got feared because of the govt. may bring FRDI bill and also the interest rates are very low for their deposits. Now a days, if a persons deposit earns more than a Rs.10,000 in an year, government is imposing 10% tax monetarily even though the interest rates in banks are very low. People also got feared that many of the banks are looted by big guns which may lead to loss of their money. If govt. print more currency notes it may lead to inflation. What is your estimation regarding this issue?
  • #639210
    People are regularly depositing money in banks. For example, my supporting staff don't deposit money directly in the bank, but they don't withdraw entire amount. Thus they are saving money. My maid-servant directly deposits money in the bank.

    Some people from middle-class background have reduced bank deposits, bu the reason may be different from what the author anticipates. They invest money in various other profitable ventures like mutual funds through SIP, NPS, etc.

    Fear-mongering won't do and will be fiercely opposed.

    Non-violence is the greatest Dharma; So too is all righteous violence.

  • #639211
    People really have a doubt on these banks these days. I feel media is more responsible for this fear. Unnecessarily they created a doubt about FRDI bill and it has gone into the minds of people. Another issue which is making a common man fearful is NPAs of all these banks and the bad debt which are to be written off. So the banks are becoming harsh on small people. So people have a doubt in their minds and trying not to keep their money in the banks. It is a foolish thinking and keeping money in the house is unsafe and it is losing its value day by day. These points are not explained by anybody to the people. That is resulting in this situation. Now RBI is trying to increase rates on Fixed Deposits to attract people to come and deposit in the banks. Let us see if there is any improvement. The people should not lose faith in the banking system which is not a welcome feature.
    drrao
    always confident

  • #639212
    Mr.Partha, The above are the facts released by RBI and now we are seeing debates on these facts in popular TV channels. Now a days we are not seeing any Rs.2000 rupees in circulation. We are mostly getting Rs.500 and Rs.100 rupees from ATM's.

  • #639214
    What are you saying? Today afternoon, I withdrew Rs. 8000/- from ATM of my bank and I got four Rs. 2000/- notes from ATM. I went to the bank just beside the ATM and had some not so cordial discussion with the cash clerk, when I requested him to give notes of smaller denomination.

    Very few people believe agenda-driven mainstream media whose main task seems to be circulation of hatred against the ruling party. Please don't believe in their parochial ideas laced with pathological, obsessive hatred.

    Non-violence is the greatest Dharma; So too is all righteous violence.

  • #639216
    There may be some grave misunderstanding in this issue. The money in cash circulation is a huge amount and it does not come to banks because a minimum amount (actually it is a huge amount in a country of our proportion) of cash has to remain in circulation.

    Nowadays, salary goes to the bank directly and whatever people withdraw comes in circulation and remaining is with the banks only.

    If there is a drastic fall in the bank deposits in comparison to last years then only we can say that there is such a problem that people are holding the cash and not depositing in the bank.

    There is no question of having or not having faith in banks as we do not have any other option.

    With more online usage and increased use of plastic cards and cheques the circulation money in cash will come down but that is a long way to go and until unless our mind set changes the objective of cashless economy will never be achieved.

    Knowledge is power.

  • #639217
    I think lack of good economists in the current Cabinet is the main reason for this sorrowful situation. Government tried to bring FRDI bill. It created lot of fear in the minds of an average depositor. The Bill may not be passed in the Parliament but it did enough damage to our economy. Banks cannot lend without any deposits. This may result in de-growth in the economy, may be not in the near future but in the long run. In addition to it, people saw the cases of Vijay Mallya and Nirav Modi. So, there is complete distrust on the banking system now at least the public sector banks. Surge in mutual fund assets itself shows that people are moving from fixed deposits.

  • #639223
    After the push given by the government and various banks to heavily use the digital banking or the on line transfer of amounts, many are not still accustomed to it and maintaining the cash payment mode. Moreover the acute shortage of currencies in the bank and the ATM 's has forced the people not to waste their money by depositing in the bank, and instead have for themselves. Moreover those who are having finance business like daily finance, they get huge interest at the end of the day by supplying cash to the needy shops and thus the cash is not seen in our hands and the banks are at loss to understand.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease


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