How Budget 2025 could boost bank deposits by ₹45,000 crore
What's the story
The tax reforms introduced in the Union Budget for 2025 are expected to increase bank deposits by ₹42,000-₹45,000 crore, according to M Nagaraju, Secretary, Department of Financial Services.
The increase is expected to come from higher savings from senior citizens and non-senior citizens alike.
Taxpayers who will benefit from the increased tax exemption limit of ₹12 lakh are also expected to contribute to this.
Senior contribution
Senior citizens to contribute ₹15,000 crore in additional bank deposits
Nagaraju expects over ₹15,000 crore in additional bank deposits from senior citizens.
This is based on current trends and the fact that senior citizens hold around ₹34 lakh crore in bank deposits.
The senior IAS officer said "since TDS [tax deducted at source] directly influences deposit behavior, this measure is expected to push deposits further."
Additional deposits
Non-senior citizens and taxpayers to add ₹27,000 crore
For non-senior citizens, additional deposits are expected to marginally exceed ₹7,000 crore on account of the tax incentives announced in the Budget.
The biggest contribution of ₹20,000 crore is expected from taxpayers benefiting from the enhanced tax exemption limit of ₹12 lakh.
Nagaraju explained that "out of the ₹1 lakh crore revenue foregone due to these measures, we expect at least ₹20,000 crore will come back into banks."
Lending boost
Bank deposit surge to strengthen lending capacity
The rise in bank deposits is expected to boost banks' lending capacity.
Nagaraju said, "if deposits grow, especially in fixed deposits, banks will be able to lend more."
This could possibly result in an upswing in credit growth due to higher disposable income among taxpayers and better savings.
The spike in deposits is also expected to improve liquidity in the banking system, allowing banks to give more loans.