Finergy Session Seven

DEMONETIZATION
Presented By :
Piyush Sareen
Kathan Bhatt

What is Demonetization?
Stripping a currency unit of its status as legal

tender
Adopted when there is change in national

currency
Also, adopted to curb black money.
Leads to economic stability.

Types of Demonetization
Aggressive Demonetization

Legal status removed immediately

Redemption time limit extremely tight
Non-aggressive demonetization

No immediate removal
Large or eternal redemption time frame

Examples of Demonetization
European nations adopting EURO
Canada removal of $1000 note
Nigeria 1984 - Unsuccessful
Pakistan December 2016 is deadline
Zimbabwe Used to have a hundred

trillion dollar note due to hyperinflation!

And many more.

Demonetizations time-frames

THE D-DAY

8th NOVEMBER,
2016

The Indian Story

Impact on Stock Markets

Demonetization as a challenge

Demonetization as a challenge

Demonetization as a challenge

Why Demonetization
In 2007 world bank estimated the size of Indias shadow

economy at 23.2 % of GDP. Assuming this ratio still

holds, thats about $ 479 billion = 32.64 lakh cr.

All rates will fall. The bank has seen huge inflow

of deposits but demand for credit has slowed

down. Therefore, lending rates too will fall but
after a gap.

- Arundhati Bhattacharya

Effects of Demonetization

Parallel economy
Money Supply
Demand
Prices
various economic
entities

Banks

Currency in
circulation
Inflation

Liquidity

Online Transactions
and alternative
modes of payment

Effects of Demonetization
Fiscal Deficit

Digital payments

GDP

Government revenue

10year G-sec yields

Public Investments

Current account deficit Tax to GDP ratio