SBI Chairman Advocates for Tax Relief on Interest Income to Boost Infrastructure Funding

State Bank of India Chairman, Dinesh Kumar Khara, has called for tax relief on interest income, suggesting it would encourage savings and support the funding of long-term infrastructure projects. He also shared optimistic projections for credit and deposit growth for the fiscal year 2024-25.

In a strategic move to bolster long-term infrastructure funding, State Bank of India Chairman Dinesh Kumar Khara has advocated for tax relief on interest income. Khara emphasized that easing the tax burden on interest earnings would incentivize savings and ultimately assist banks in capital formation.

Presently, banks must deduct tax on interest income exceeding Rs 40,000 annually across all branches, while interest from savings accounts up to Rs 10,000 is tax-exempt.

Speaking to PTI, Khara expressed that such tax relief expected in the upcoming 2024-25 Budget would serve as a significant incentive for depositors, thereby enhancing the banking sector's ability to channel these deposits into developmental projects.

Finance Minister Nirmala Sitharaman is slated to present the Full Budget for the fiscal year 2024-25 next month. Meanwhile, Khara is optimistic about a 14-15 per cent loan growth, correlating this projection with the current economic growth and inflation rates.

Khara also highlighted the bank's comfortable position with an 11 per cent deposit growth from the previous year and an excess Statutory Liquidity Ratio (SLR) between Rs 3.5 lakh crore and Rs 4 lakh crore.

Recently, SBI adjusted its fixed deposit rates, increasing the rate for retail term deposits of 46-179 days by 75 basis points to 5.50 per cent. This move aims to improve the bank's deposit growth rate to 12-13 per cent this fiscal year.

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