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The Indian Banks Association (IBA) feels that banks are losing market share of bank FDs to mutual funds, insurance and small savings schemes.
In its budget wish list, IBA has requested the union finance minister that interest income of up to Rs.5 lakh on bank FDs should be tax exempt. The association feels that this will make bank FDs popular again.
Currently, interest on FDs is entirely taxable, which generates lower post-tax returns for investors.
The total deposits as on November 2022 stood at Rs. 173.70 lakh crore while the AUM of MFs is Rs.40 lakh crore as on October 2022 and the AUM of life insurance industry is Rs.47 lakh crore as on March 2021.
