Demonetization, implemented in India in November 2016, was a significant economic policy initiative aimed at combating corruption, black money, and counterfeit currency. This case study explores the effects of demonetization on various segments of India's financial markets.  Following the announcement of demonetization, the Indian government invalidated high-denomination currency notes, leading to a temporary cash crunch and disruption in economic activity. The policy had widespread implications for different sectors, including banking, stock markets, real estate, and informal sectors of the economy.  Demonetization had far-reaching consequences for India's financial markets, impacting banking operations, stock market performance, real estate dynamics, and the informal economy. By analyzing the effects of demonetization across various sectors, students can gain insights into the complexities of economic policy implementation and its implications for financial market stability and growth in India.

Learning Objectives

 

1. Analyze the effects of demonetization on the banking sector in India.
2. How did demonetization influence liquidity, deposit mobilization, and credit growth in the banking system?