The government had discontinued Rs 500 and Rs 1,000 banknotes from November 9, 2016 and issued new Rs 500 and Rs 2,000 currency notes in exchange for the discontinued ones.
The long-term impact of this move on the Indian economy and the banking sector is uncertain, SBI told institutional investors prior to its Rs 15,000 crore share sale through private placement.
The effects of India’s recent demonetisation decision are uncertain, which may adversely affect the bank’s business, results of operations and financial condition, the bank said in the Preliminary Placement Document to investors while flagging the ‘risk factors’.
“The demonetisation has and may continue to result in a slowing down of the Indian economy, which may adversely affect the Bank’s business,” it said.
The document, SBI had said contains forward-looking statements that involve risks and uncertainties. Further, the financial performance may differ from “such forward-looking” statements as a result of certain factors.
Post-demonetisation, there has been a surge in the CASA deposits of banks.
As per a RBI report, the sharp increase in the share of CASA deposits in aggregate deposits by 4.10 per cent to 39.30 per cent (as of February 17, 2017) resulted in a reduction in the cost of aggregate deposits, and banks have correspondingly lowered their term deposit rates.
As a result, the bank may face increased competition from commercial banks and other lending institutions, it said while highlighting the risks associated with demonetisation.