Tax relief initiatives introduced in Budget 2025-26 are expected to bring fresh funds into the banking system, increasing the flow of deposits and improving liquidity. Various scenarios by the Department of Financial Services (DFS) estimated that the deposits may get Rs. 42,000 and Rs. 45,000 crore boost.

As per the Secretary Department of Financial Services, M Nagaraju, the measures announced in Budget are likely to enhance the liquidity ratio of the banking segment.

Senior citizens, who will get advantage from the Budget, will deposit their funds in banks’ Fixed Deposits (FD) schemes.

The budget has introduced a hike in the income tax exemption limit to Rs. 12 lakh for the current financial year. Additionally, the TDS limit for FD interest income has been raised to Rs. 1 lakh from Rs. 50,000 for senior citizens and for general citizens, the limit has been increased to Rs. 50,000 from Rs. 40,000 annually.

This will boost the bank’s liquidity system, reducing its reliance on expensive borrowing. Nagaraju further stated