Budget proposals for income tax cuts and other tax changes will assist banks in mobilising Rs 40,000-45,000 crore more deposits, Financial Services Secretary M Nagaraju said on Monday.

The Union Budget 2025 proposes raising the tax deduction at source (TDS) threshold for interest earned on fixed deposits for general (non-senior) citizens from Rs 40,000 to Rs 50,000 per fiscal year.

The TDS threshold for fixed deposit interest income earned by senior citizens will increase from Rs 50,000 to Rs 1 lakh beginning in FY2025-26, he stated.

"We see over Rs 20,000 crore coming back into the banking system due to the hike in tax rebate limit, over Rs 15,000 crore from the hike in TDS threshold on interest earned from savings deposits by senior citizens," he said following the Budget's announcement.

Aside from these two, he estimates that non-senior individuals will save Rs 7,000 crore due to changes in income tax slabs. When asked about MTNL debt resolution and the haircuts that banks are willing to take, banks will make their decision based on existing norms.

"Have you seen banks taking haircut before the loan is restructured (or taken for resolution under IBC...we all follow RBI guidelines," he said.

He stated that lenders transferred 24 NPA accounts worth Rs 1 lakh crore to the National Asset Reconstruction Company Limited (NARCL).