Union Finance Minister Nirmala Sitharaman
Credit: PTI Photo
New Delhi: Banks and non-banking financial companies (NBFCs) on Wednesday requested the central government to lower tax on interests earned on fixed deposits to help boost low-cost deposit mobilisation as an increasingly higher number of people are opting for direct investments in equities.
Representatives from the financial sector made this demand during a pre-budget consultation meeting with Union Finance Minister Nirmala Sitharaman.
During the meeting NBFCs sought government support in raising money for refinance. NBFC representatives suggested setting up a dedicated refinance window in line with the National Housing Bank, which monitors the liquidity position of Housing Finance Companies in the country. The National Housing Bank also provides financial support to eligible institutions.
According to sources, representatives of NBFCs argued that a dedicated refinance window would help ensure uninterrupted credit flow to underserved segments, especially small businesses. By ensuring stable and affordable funds to NBFCs the dedicated finance window would lead to significant drop in cost of lending.
Amid growing trend of direct investments in the equity markets, the financial institutions have requested the government to take measures to make bank deposits more attractive by lowering tax on interest earned.
ICICI Bank executive director Sandeep Batra, L&T Finance managing director Sudipta Roy, Bajaj Finance Deputy CEO Manish Jain, IIFCL managing director Palash Srivastav, HDFC Life Insurance Company managing director Vibha Padalkar and senior executives of other banking, finance and insurance companies participated in the pre-budget consultation meeting.
Meanwhile, the Union Finance Minister also held meetings with experts and stakeholders from the information technology sector.
Infosys global tax head Sunil Kumar Dhareshwar, Google India country manager Preeti Lobana, Cognizant Technology Solutions India chairman Rajesh Varrier, IBM India CFO Tejaswini Rajwade, HCL Tech COO Rahul Singh were among participants in the IT sector stakeholder consultation.