Private sector lender Kotak Mahindra Bank gained about Rs 5,400 crore as deposits in Rs 2,000 notes following RBI's decision to withdraw these banknotes from circulation, a senior official declared. Virat Diwanji, group president and head of customer banking at Kotak Mahindra Bank, said that the bank has a 2-2.5% market share in banking system deposits, but its share in the Rs 2,000 banknote deposits, so far, is greater at about 3.5%. He added that most of these deposits are coming from businesses and, therefore, into current accounts. Diwanji said that while the bank has seen a sudden increase in deposits owing to the Rs 2,000 note withdrawal, it might be transient.
As per RBI disclosures last week, Indians have returned about Rs 1.8 trillion in Rs 2,000 notes, 85% of which have been deposited into banks while the rest have been exchanged. The total value of Rs 2,000 banknotes in circulation declined to Rs 3.62 trillion or 10.8% of notes in circulation on 31 March from Rs 6.73 trillion on 31 March 2018, constituting 37.3% of notes in circulation, according to RBI data. On 19 May, RBI announced the withdrawal of Rs 2,000 banknotes from circulation, giving people holding these notes until 30 September to deposit or exchange them. The central bank cited its ‘Clean Note Policy’ as one of the reasons for this withdrawal.
Meanwhile, Kotak launched a feature called ActivMoney on its deposit products. Use of this feature would allow customers to automatically move excess funds in their account in multiples of Rs 10,000, beyond a defined threshold, to a 180-day term deposit. The bank said that the default minimum threshold over which the surplus funds earn higher interest through a fixed deposit is Rs 25,000 for savings, salary, and 811 accounts and Rs 50,000 for current accounts.