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'Demonetisation' aftermath hits Indian banks before benefits

Demand for credit has plummeted while additional costs have been incurred to make the transition

The decision to remove 500 and 1,000 rupee notes has led to a severe cash shortage as the Reserve Bank of India has replaced barely a third of the higher-value notes that had been in circulation.


INDIA'S shock move to abolish high-value banknotes was expected to deliver a windfall to lenders, and banks have indeed seen coffers swell after people deposited 12.4 trillion rupees (S$264.7 billion) in cash into the system.

But while banks may benefit in the longer term,...

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