Cut lock-in period for tax saving deposits to 3 yrs: bankers

This will help channelise more funds into the banking sector

Bankers today demanded that lock-in period for tax saving deposits be brought down to three years from five years to channelise more funds into the banking sector.

In a pre-budget consultation with Finance Minister P Chidambaram, bankers also sought permission to issue tax-free bonds like other financial institutions for raising funds and augmenting business.

"Tax saving bonds are already there (with banks), tax saving deposits are already there. So there was a requirement that this lock-in period should be reduced from five years to three years on the tax saving deposits to bring it in line with tax saving ELSS (equity linked saving schemes)," SBI Chairman Pratip Chaudhuri said.

He was talking to reporters after the meeting of bankers with the Finance Minister.

"Some of the banks...Made a request that they should also be allowed to issue tax-free bonds as has been allowed to other financial institutions because banks have good distribution network and can finance infrastructure projects," he said.

Bankers who attended the meeting include, Indian Overseas Bank CMD M Narendra, UCO Bank CMD Arun Kaul, Punjab National Bank CMD K R Kamath, ICICI Bank MD Chanda Kochhar, Axis Bank MD Shikha Sharma and Chairman of HDFC Ltd Deepak Parekh. Besides, RBI Deputy Governor K C Chakrabarty also attended the meeting.

On gold imports, the bankers said the import was also connected to jewellery exports and any efforts to bring down the inbound shipments would affect jewellery exports.

"Any restriction on gold import should be done carefully and in a calibrated manner because gold import has also a correlation with jewellery export," Chaudhuri said.