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Kotak Mahindra Bank gets ₹5,400 crore deposits in ₹2,000 banknotes

2 min read 15 Jun 2023, 07:11 PM IST Shayan Ghosh

Virat Diwanji, group president and head of consumer 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 ₹2,000 banknote deposits, so far, is higher at about 3.5%

The bank said that the default minimum threshold over which the surplus funds earn higher interest through a fixed deposit is ₹25,000 for savings, salary and 811 accounts, and ₹50,000 for current accounts.

Mumbai: Private sector lender Kotak Mahindra Bank has received about ₹5,400 crore as deposits in ₹2,000 notes following RBI's decision to withdraw these banknotes from circulation, a senior official said on Thursday.

Virat Diwanji, group president and head of consumer 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 ₹2,000 banknote deposits, so far, is higher 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 ₹2,000 note withdrawal, it might be transient.

As per RBI disclosures last week, Indians have returned about ₹1.8 trillion in ₹2,000 notes, 85% of which have been deposited into banks while the rest have been exchanged. The total value of ₹2,000 banknotes in circulation declined to ₹3.62 trillion or 10.8% of notes in circulation on 31 March from ₹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 ₹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 on Thursday 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 ₹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 ₹25,000 for savings, salary and 811 accounts, and ₹50,000 for current accounts.

ABOUT THE AUTHOR

Shayan Ghosh

Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.