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A key metric of profitability for Indian banks, lending margins, is set to get a boost as the nation’s decision to withdraw its highest-value currency note bolsters bank deposits. The Reserve Bank of India’s move to withdraw the 2,000 rupees ($24) notes will lead to growth in deposits at banks and lower their cost of funds.
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But as the rush to deposit the high-value currency notes before the deadline gathers pace, banks’ margins could expand, said Madan Sabnavis, chief economist at state-run Bank of Baroda.
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