Demonetisation led to multiple benefits, lower interest rates: PMO

New Delhi: Banks have lowered their lending rates by about 1 per cent post demonetisation, the Prime Minister's Office on Tuesday said, citing "multiple benefits" of the scrapping of old high-value currency notes.

The government scrapped the old Rs 500/1,000 notes on November 8, 2016 and the holders were asked to deposit them with banks by December 30 that year. Although there was separate timelines for NRIs and those who were abroad during the period.

On January 1, State Bank of India surprised the markets by slashing the marginal cost of funds based lending rate (MCLR) by 0.9 per cent.

Other banks followed suit.

The outstanding demonetised notes as on November 8, 2016 were Rs 15.44 lakh crore. Of these, Rs 15.28 lakh crore or 99 per cent were returned, leaving only about Rs 16,000 crore outside the banking system.

"Loans got cheaper since lending rates declined by around 100 basis points", said the Prime Minister's Office in a tweet while highlighting the "multiple benefits of demonetisation".

In its October monetary policy review, the RBI flayed banks for keeping the lending rates high and flagged concerns over base rate MCLR, saying these have not been able to improve monetary transmission.

The PMO further said real estate priced declined.

Revenues of urban local bodies (ULBs) across the country increased almost 3 times as consumers were allowed to pay their dues in the demonetised currency.

The revenues of ULBs in Uttar Pradesh increased 4 times while that of Madhya Pradesh and Gujarat were up almost 5 times.

Referring to digital modes of payments, the PMO further said that the number of debit card transactions increased by 50 per cent to 26.55 crore in August as compared to 13.05 per cent in the same month last year. The value of transactions too increased by 48 per cent to Rs 35,413 crore.