With fees earned from facilitating tax collections doubling, IDBI Bank plans to step up its focus on government business.

In fiscal 2012-13 (FY13), the public sector bank earned Rs 60 crore fee income (Rs 30 crore in FY12) from government business, which includes facilitating collection of direct and indirect (Central) taxes, State sales tax and treasury business.

Direct tax includes corporate and personal income-tax while indirect tax includes Customs duty, excise duty and service tax.

IDBI Bank facilitated central tax collections aggregating Rs 1,42,776 crore in FY13 against Rs 1,12,543 crore in FY12, registering a 27 per cent growth. As per the revised budget numbers, the central tax collection in FY13 amounted to Rs 10,35,381 crore.

The bank also mopped up Rs 16,198 crore in FY13 for 14 States by way of sales tax/value-added tax against Rs 12,125 crore in FY12.

According to Viney Kumar, Executive Director, “We are proactively encouraging our customers to pay their taxes through us. This is part of our cross-sell activity.

“We want to leverage our technology as much as possible to facilitate e-payments to the Central and State Governments. Even non-IDBI customers can pay their taxes through us.”

Government business presents two-fold advantage for banks. While banks earn fee income, the funds collected also improve their overall low-cost CASA (current account, savings account) deposits, albeit only for a day.

“Any banking relationship is not just an asset relationship. It has to be seen holistically as asset plus liability plus whatever other cross-sell opportunities that a commercial bank can tap,” said Kumar.

The IDBI official pointed out that there was an over 200 per cent jump in Customs duty collection in FY13 to Rs 22,000 crore from Rs 7,000 crore a year ago.

“We introduced a system of multiple challan (receipt) payment facility for Customs duty through a single e-payment transaction (you can upload multiple challans in one go instead of uploading one by one). This facility helped push up Customs duty collection,” said Kumar.

ramkumar.k@thehindu.co.in

(This article was published on April 8, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.