Budget 2024: Bankers hope tax changes make FDs more attractive

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Bankers expect more term deposits now with the disappearance of the arbitrage, likely helping lenders that are struggling to raise liabilities in line with asset expansion.

«Even if it does not lead to inflows into deposits, I think it will arrest any further outflows as savers will look at this avenue more closely,» said Sanjay Mudaliar, executive director at Bank of Baroda. «Increase in government spending is also a big positive for banks because it could lead to higher inflows into bank deposits. So, all in all, the budget has been positive for banks because it has not aggravated the deposit challenge. Of course, banks will have to step up efficiencies to make full use of these measures,» he added.

In her budget speech on Tuesday, finance minister Nirmala Sitharaman proposed to hike the short-term capital gains tax on all listed equity instruments to 20% from 15%. Long-term capital gains on listed equity instruments and specified financial and non-financial assets have been hiked to 12.5% from 10%. Moreover, the indexation benefit has also been removed from all the assets for computing long-term capital gains which will disallow any inflation adjustment, increasing the tax outgo.

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