The finance ministry expects ₹40,000-45,000 crore to flow into banks as deposits from the various tax changes announced in the Budget, including raising the tax-free income level to ₹12 lakh, financial services secretary M Nagaraju said during a media interaction on various Budget proposals on Monday.
Union Budget 2025, which finance minister Nirmala Sitharaman presented on Saturday, proposed an increase in the income tax exemption limit to ₹12 lakh. It also proposed an increase in the tax deducted at source (TDS) threshold on interest earned from fixed deposits for general (non-senior) citizens from ₹40,000 to ₹50,000 per financial year. The TDS threshold for fixed-deposit interest income earned by senior citizens will increase from ₹50,000 to ₹1 lakh from FY26.
“These measures, as per an assessment, suggest that about ₹40,000-45,000 crore will flow into banks as deposits. Additional deposits will increase the banking system’s liquidity, reducing dependence on high-cost borrowing,” Nagaraju said.
He said that banks’ current account savings account (CASA) ratio is already at a yearly level of 40% and these measures will give it a further boost. A bank’s CASA ratio is the ratio of deposits in current and saving accounts to its total deposits.
‘Insurance reforms will be tabled in budget session’
Nagaraju also said on Monday that the Insurance Laws (Amendment) Bill, which proposes wide-ranging reforms in the sector including 100% foreign direct investment (FDI) and provisions for a composite licence, has been approved by the finance ministry and will be introduced in the ongoing budget session of parliament.
He said the final draft of the amendment bill was being vetted by the law ministry and would soon be sent for cabinet approval soon. “We expect to introduce the bill in the budget session, probably after the session reconvenes later. The government wants to make the changes as quickly as possible,” Nagaraju said.
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