In his plea for tax relief on income interest, State Bank of India Chairman Dinesh Kumar Khara said that banks would be able to save money that they might use to finance long-term infrastructure projects.
"Depositors will be encouraged if there is any chance of a budgetary reprieve from the tax on interest profits. In the end, the banking industry leverages the deposits that are raised for the nation's capital formation," he stated in an interview with PTI.
How Will Investors Gain From It?
At the moment, banks must take out taxes when interest revenue from deposits made across all bank branches combined exceeds Rs 40,000 annually. Interest on savings accounts is tax-free up to a total of Rs 10,000.
Customers can save money at a bank for a specific amount of time using bank deposits. Interest is paid by the financial institution according to the quantity and length of deposits.
SBI Chairman On Loan Expansion
Finance Minister Nirmala Sitharaman is expected to propose the whole budget for 2024–25 to the legislature the following month. The chairman of the SBI anticipates loan growth of 14–15% in the fiscal year 2024–2025, given the rate of economic growth that is currently occurring.
"Typically, we view it as the GDP growth rate plus inflation, plus an additional two to three percent. That gives us the percentage of about 14%," he stated.
Therefore, 14–15% credit growth is appropriate given our risk tolerance and relies on the lending possibilities available. We'll be content to expand at this rate," he remarked.
SBI Chairman Regarding Growth in Deposits
He stated that deposits increased by 11% in the previous year. "And we have some elbow room available in terms of excess SLR which ensures that we don't have any pressure on us to raise the deposit rates for supporting our loan-to-deposit ratio," he said.
Between Rs 3.5 lakh crore and Rs 4 lakh crore, the bank's excess Statutory Liquidity Ratio (SLR) is present.
As an aside, I should mention that our loan-to-deposit ratio is actually around 68–69%. Thus, there is sufficient space for us to lend without raising the interest rates on deposits.
Still, he declared, "We always prioritize deposits. We decided that there was potential for improvement and that we should, at least in part, enhance our deposit growth rate this year, which is why we recently raised the interest rate on short-term deposits. And we're working to ensure that this year we expand by at least 12–13 percent."
SBI increased the fixed deposit rate by up to 75 basis points on a few short-term maturity options last month. The rate for 46-179-day retail term deposits went from 4.75 percent to 5.50 percent, an increase of 75 basis points.
