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Hike tax exemption on bank deposit interest to Rs 25K: AIBEA

PTI Vadodara | Updated on June 26, 2014 Published on June 26, 2014

Bank employees body AIBEA has demanded an increase in the exemption of tax on interest earned on bank deposits to Rs 25,000 from Rs 10,000 at present from the government in its maiden Budget next month.

The limit of Rs 10,000 was fixed about a decade ago and hence needs to be revised, because bank deposits are the only source of income for senior citizens and retired employees, All India Bank Employees’ Association (AIBEA) General Secretary C H Venkatachalam told PTI here today.

AIBEA has made the suggestion to Union Finance Minister Arun Jaitley for the Budget, he said.

The AIBEA has also opposed moves to merge nationalised Banks. It has also suggested that the SBI’s associates or subsidiary banks be freed from the SBI and made completely independent banks, he said.

“Public sector banks have played a very important role in the country’s development and all of them survived even when the largest banks in the USA and elsewhere collapsed during the global recession of 2008”.

“Therefore, merger of public sector banks into a single bank is not in national interest, since people prefer to park their hard earned money in public sector banks, because they know that their money is safe in public sector banks,” the AIBEA leader said.

“Government policy should aim at promoting savings and investments by parking funds in public sector banks. Hence the government should persuade public sector banks to increase the interest rate on bank accounts to around 5.05 per cent,” the AIBEA leader said.

Other suggestions and proposals made by AIBEA include bringing all private sector banks under the public sector, besides an assurance that government stake holdings in public sector banks would not be reduced below 51 per cent.

Instead, the AIBEA has suggested that the government should ensure complete hold over these banks by controlling 100 per cent of their equity.

AIBEA has asked that floating of asset reconstruction companies as a tool to reduce NPAs should be discouraged, and these NPAs should be actually recovered from corporate defaulters.

Auction of NPAs should also be stopped, because it involves huge write-offs which ultimately end up resulting in heavy losses to banks, he said.

The AIBEA has demanded that the Reserve Bank of India (RBI) should ban corporate houses borrow under the overseas commercial bodies (OCB) route because they tend to park such borrowings with domestic banks, merely to earn a higher rate of interest, instead of actually deploying the money to implement productive projects.

The RBI policy of giving licences to private sector corporate houses to open banks should be discouraged and such a licencing policy should be discontinued, Venkatachalam said.

Published on June 26, 2014
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