The Chairman of the State Bank of India, Dinesh Kumar Khara, has advocated for tax relief on interest income in the upcoming Budget. He emphasized that such relief would enable banks to attract more savings, which could then be utilized to finance long-term infrastructure projects. Presently, banks are mandated to deduct tax when the interest income from combined deposits in all bank branches exceeds Rs 40,000 in a year. Additionally, interest earned up to Rs 10,000 from savings accounts is exempt from tax.
Khara expressed that providing tax relief on interest earnings in the Budget would serve as an incentive for depositors. He highlighted the significant role of deposits in capital formation within the country through the banking sector. The Full Budget for 2024-25 is anticipated to be presented by Finance Minister Nirmala Sitharaman in the Parliament next month.
In line with the current economic growth rate, the SBI chairman foresees a 14-15% loan growth in the fiscal year 2024-25. He explained that the anticipated credit growth is based on the GDP growth rate, inflation, and an additional 2-3%. This projection indicates the opportunities available for lending and aligns with the bank’s risk appetite. Khara also noted that deposits grew by 11% in the previous year.
Furthermore, SBI possesses excess Statutory Liquidity Ratio (SLR) ranging between Rs 3.5 lakh crore and Rs 4 lakh crore, providing flexibility without necessitating an increase in deposit rates to maintain the loan-to-deposit ratio.
Recently, the bank raised the fixed deposit rate for selected short-term maturities by up to 75 basis points. The rate for retail term deposits of 46-179 days was increased by 75 basis points to 5.50%.