Bankers set high hopes from upcoming Budget 2017

With just a week left for Union Finance Minister Arun Jaitley to table the country's Budget, the banking sectors' who's who are being vocal about the expectations that they seek from the NDA-led government's fourth budget. 

The banking sector has been going through a painful phase in India. While large-scale defaults have weakened the balance sheets of the banks on the one hand, lower credit growth is exerting cost pressure on the other. The bankers expect the budget to allocate more funds to infrastructure and focus on capex revival. According to a banker, "Higher allocation to infrastructure, housing and urban development will ease the stress level of corporate India's balance sheet." The banking sector also wants the government to infuse more capital into public sector banks so as to improve their capital adequacy position.

Earlier, a meeting was held between Finance Ministry and representatives of banking and financial institutions, where certain major issues were raised. For example, a consumer may also be given a tax rebate at the end of the year if his digital purchase is more than a certain amount. To curb unemployment, bankers want a provision to be made in which if a firm employs a certain number of people, it should get 2-3 per cent tax relaxation. This would directly link tax rates with job generation.

Besides, the Finance Bill should mandate all wages to be paid by the employers only through banking channel or digital mode. Also, the bankers are of the view that the need of the hour is to extend full tax exemption for non-performing asset (NPA) provisioning, keeping in view the banks' profitability. They feel that there is a also a need for recapitalisation of banks in the current FY2016-17 as well as in FY2017-18.

The Modi government's Pradhan Mantri Awas Yojna (PMAY) launched in 2015 was aimed at providing housing for all. Therefore, an increase in the tax deduction for interest paid on housing loan is expected in the budget. Some concessions may be offered in the Union Budget 2017-18 to increase the tax benefit on payment of interest beyond the annual Rs 2 lakh, to give a helping hand to both the industry and tax payers.