India announces incentives after cash ban

According to media reports, India’s Prime Minister Modi defended his decision to cancel high denomination banknotes in mid-November and announced many incentives to the poor, farmers, women and small businesses last Saturday before the New Year. A discount of 4% on interest rates for home loans taken in 2017 was another measure to be taken by the government as well as increasing credit guarantees for small businesses and giving incentives for digital transactions.

In addition, after the Prime Minister called for banks to increase lending for the poor, State Bank of India announced that it will reduce lending rates by 90 basis points, which is expected to improve credit growth and private investment, the reports revealed.

Narendra Modi had announced that the government would remove 500 and 1,000 rupee notes (approximately £6 and £12) from circulation on November 8 for the purpose of combating corruption, black-market trade and tax evasion after which many Indians who face cash flow problems panicked and waited in long bank queues to exchange their high-value banknotes.