Expectations
- Reduce the lock-in period for bank tax saving FDs to three years from five years for benefit U/s 80C of the Income Tax Act.
Outlook
Reducing the lock-in period will benefit the banking sector generate more medium term deposits, and reduce its asset liability mis-match. Banks can be on a better footing than other investments eligible for benefit U/s 80 C like Public Provident Fund (PPF), ELSS and National Savings Certificate, if the mandatory tenure is reduced to e years.
