The banking system could face increased competition on deposits with the Budget proposing the introduction of a new women-focused Small Savings Scheme (SSS), even as it increased the investment limit for some of the existing schemes.
The budget proposals come in the context of bank deposit growth lagging behind credit growth. Therefore, banks may have to further increase 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 investment limits on several small savings instruments amid a high-risk environment. credit growth”.
Union Finance Minister Nirmala Sitharaman said a new one-time small savings scheme, the Mahila Samman Savings Certificate, will be available for a two-year period until March 2025. This will offer a deposit facility of up to ₹2 lakh in the name of women. or girls with a term of two years at a fixed interest rate of 7.5 percent with a partial withdrawal option.
The budget also improved the maximum deposit limit for the senior savings scheme from ₹15 lakh to ₹30 lakh.
The maximum deposit limit for the monthly income account scheme will be improved from ₹4.5 lakh to ₹9 lakh for an individual account and from ₹9 lakh to ₹15 lakh for a joint account.
