Reserve Bank of India Deputy Governor Viral V Acharya has said that the impact of note ban on country’s gross domestic product (GDP) growth may be seen in the fourth quarter of the current financial year in some segments. Though, he also said that remonetisation process is taking place at a very fast pace and the process will normalize in the next two to three months.
The newly appointed Deputy Governor has said that the cash shortage was like a liquidity shock and unless it has led to a wealth destruction and he also expects that the effect to be quite temporary, though it has been hard on some sectors. He further said that there may be a couple of sectors, like 2-wheeler sales, where there is slightly slower rebound. He further said that the impact of demonetization move would help in bringing informal sector into the mainstream economy. Talking about GDP estimates, the RBI Deputy Governor has said that their GDP estimates were reasonably close to the Central Statistics Organization (CSO) numbers, despite the fact that the drivers could have been slightly different.
Acharya further speaking about asset quality review (AQR) has said that it is on track and the RBI had set a deadline of March 2017 for completion of AQR exercise for the public sector bank. He also pointed out that it has had a debilitating impact on banks' numbers and their stocks and added that the move resulted in a spike in bad assets with lenders recognizing over Rs 1 lakh crore of bad assets in the December quarter alone.