The banking system could face more competition on deposits with the Budget proposing the introduction of a new women-focussed small savings scheme (SSS) even as it upped investment limit for some of the existing schemes.

The Budget proposals come in the backdrop of banks’ deposit growth lagging credit growth. So, banks may have to further up deposit rates.

Karthik Srinivasan, Senior Vice-President, Group Head, Financial Sector Ratings, ICRA, said: “The banking system could see more competition on deposits given the increase in investments limits across various small saving instruments amid an environment of high credit growth.”

Union Finance Minister Nirmala Sitharaman said a one-time new small savings scheme, Mahila Samman Savings Certificate, will be made available for a two-year period up to March 2025. This will offer deposit facility up to ₹2 lakh in the name of women or girls for a tenor of two years at fixed interest rate of 7.5 per cent with partial withdrawal option.

The Budget also enhanced the maximum deposit limit for Senior Citizen Savings Scheme ₹15 lakh to ₹30 lakh.

The maximum deposit limit for Monthly Income Account Scheme will be enhanced from ₹4.5 lakh to ₹9 lakh for single account and from ₹9 lakh to ₹15 lakh for joint account.