State Bank of India chairman pitches for tax relief on interest income from the Union Budget

Dinesh Khara said that the relief can help the banks boost their savings, which can be used to fund projects.

The Chairman of the country’s largest bank, the State Bank of India, on June 20 pitched for tax relief on the interest income. In an interview with PTI, Dinesh Khara said that the relief can help banks boost their savings, which can be used to fund projects.

"If at all some relief could be given in the Budget regarding tax on the interest earnings, it will be an incentive to depositors. Eventually, the banking sector uses deposits mobilised for the capital formation in India," Khara said in the interview.

The current taxation laws permit banks to deduct tax on interest income earned on deposits if it is over Rs 40,000 a year.

The finance ministry is holding talks with various stakeholders ahead of the presentation of the Union Budget 2024-25 which is expected to be presented in mid-July.

In the interview, Khara also said that the bank is expecting 14-15 percent credit growth during the fiscal year 2024-25. "Normally the way we look at it is that the GDP growth rate plus inflation and 2-3 per cent over that. That gives us the number around 14 per cent or so,” Khara said.

"Hence, 14-15 percent credit growth depends upon the opportunities available for lending, and it meets our risk appetite. We will be happy to grow at this pace," he said. As far as deposits are concerned, he said, it grew by 11 percent last year.

"And we have some elbow room available in terms of excess SLR and which ensures that we don't have any pressure on us to raise the deposit rates to support our loan-to-deposit ratio," he said.