NEW DELHI: State Bank of India on Sunday expressed concern that demonetisation, announced in November 2016, may continue to result in slowing down of the economy, and adversely affect its business. The long-term impact of this move on the Indian economy and the banking sector is uncertain, SBI told institutional investors prior to its H15,000 crore share sale through private placement.
SBI said the preliminary placement document to investors contains forward-looking statements that involve risks and uncertainties. Further, the financial performance may differ from “such forward-looking” statements as a result of certain factors.
SBI said increased competition may have an adverse effect on the net interest margin and other income and if the bank is unable to compete successfully, its profitability may decline. The note ban move could also result in an increase in compliance costs and higher incidents of fraud.
Demonetisation led to a rise in the share of CASA deposits in aggregate deposits by 4.10 per cent to 39.30 per cent (as of Feb 17, 2017) resuling in a reduction in the cost of aggregate deposits, and banks have lowered their term deposit rates, said an RBI report.