Slamming economists and analysts for predicting a sharp fall in GDP due to the demonetisation, HDFC Bank's Managing Director Aditya Puri has said this would drive the country towards a less-cash economy.
In an interview with the Business Standard, Puri said: "I think it (the fall in GDP) is absolute nonsense. How many times have analysts and economists been right? Some people say GDP will become 2 percent, some say 6 percent. The question is how do they know GDP will fall."
Interestingly, this comment from one of the top bankers of India has come at a time when former prime minister Manmohan Singh had voiced concerns in Parliament over likely GDP fall of 2 percent due to the note ban.
"Demonetisation shouldn't be looked at as a single, standalone event, but should be put in the context of overall measures that will drive India towards a cashless economy," he had said.
Talking about the effect on banks, Puri admitted that there is bound to be a "temporary aberration". The government will invariably look to suck out excess cash from the system through measures such as the 100 percent CRR. He also stressed that once there are enough securities, the RBI could ease the CRR.
Puri, however, admitted that given the huge scale of operation, there ought to be some pain for all stakeholders. "Considering the mammoth nature of the exercise, there is bound to be 'temporary aberration' at the banks as of now."
The move to tender higher denomination notes illegal has led to a rush in banks with people waiting for hours to withdraw cash from banks and ATMs. As the supply of new currencies has been considerably lower than the demand, it has created a liquidity crunch in the system.
Earlier, Puri had written to his bank clients lauding the move of demonetisation. "The step was necessary to root out counterfeit notes from the country. This will also make the country move towards reduced usage of cash."
