Rs 2,000 note recall, HDFC merger, incremental CRR led monetary, credit evolution: Economic Survey 2024

The expansion in reserve money and currency in circulation (CiC) moderated due to the return of a predominant part of ₹2,000 banknotes to the banking system as deposits.

The withdrawal of 2,000-rupee notes, merger of HDFC Bank with HDFC Ltd and imposition of incremental cash reserve ratio led the evolution of monetary and credit conditions in fiscal 2024, the economic survey for the year showed.

“Important factors impacting the evolution of monetary and credit conditions during FY24 were the withdrawal of Rs 2,000 banknotes (May 2023), the merger of HDFC, a non-bank, with HDFC Bank (July 2023), and the temporary imposition of the incremental CRR (August 2023).

The expansion in reserve money and currency in circulation (CiC) moderated due to the return of a predominant part of Rs 2,000 banknotes to the banking system as deposits,” the survey showed.

According to the Reserve Bank of India, 97.87 percent of Rs 2,000 notes have returned to the banking system. This, and an increase in term deposit rates, according to the survey, has contributed to an acceleration in aggregate deposits and broad money.