Nirmala Sitharaman holds pre-Budget consultations

Financial sector and capital market experts on Thursday suggested that finance minister Nirmala Sitharaman review interest rates on the government’s small savings schemes and create a dedicated liquidity window for non-banking financial companies (NBFCs) to make cheaper loans available to industry that can boost investments and accelerate growth.

Commercial banks are unable to compete with the government’s small savings schemes such as post office deposits, National Saving Certificates (NSC), Public Provident Fund (PPF) and Sukanya Samriddhi that offer 8% interest, which is higher than rates offered by bank fixed deposits and savings account deposits (ranging between 4% and 7.35% depending on tenure and scheme), government and industry officials present in the meeting said requesting anonymity.

The interaction was part of the finance minister’s pre-budget consultations with stakeholders of various sectors. The Budget for 2019-20 is scheduled to be presented on July 5.