Mumbai, Jan 2: After a New Year gift of 0.9 percentage point cut in lending rates, State Bank of India (SBI) Chairperson Arundhati Bhattacharya on Monday said she saw normalcy return to the banking system by end-February or March, with uptake in credit growth. The prediction comes at the end of the first deadline for surrendering all demonetised notes of Rs 500 and Rs 1000. 

 The chairperson said banks, indeed, have huge low-cost funds driven by deposits following the demonetisation drive. This, she felt, will flow out. "But we expect 40 per cent of that to stay with the bank," she added. "At that time, we will have a relook at the deposit rates."
 
Referring to the rate cut announced on Sunday, Bhattacharya said: "This is a liquidity-driven rate cut. The liquidity in the system in unprecedented, in terms of the fact that what we did in the first nine months of the year, we have done one-and-half times that in 30 days."
 
At the same time, this excess liquidity was marked by a lower credit growth. "But we want to give a very clear signal that we are open for business. There is demand in the economy and there should not be any uncertainty on this."
 
With complaints of slow cash flow in the economy, the prediction is a sign of improvement in the coming days wherein cash flow from ATMs will not be a problem any more. Already the ATM withdrawl limit has been increased from Rs 2500 to Rs 4500 with effect from January 1st, 2017.