NEW DELHI: RESH returns on bank deposits have been negative for a considerable period of time and this is probably one reason why more and more retail investors join the stock market, a report by Bank Negara India (SBI) shows.
This report also implies that low interest rates will likely continue in the near future.
“With the RBI it makes it very clear that supporting growth is the main goal, a low low interest rate is not possible to make the northern bound movement in the near future with abundant liquidity.
This implies that the juling run on the current financial market is probably a break from the past because of the past Households may enter the bandwagon from self-prophecy from a decent return on their investment, “said SBI report.
The SBI report said that now is the right time to review interest taxes on bank deposits, or at least increase the threshold of senior citizens.
At present, the bank reduces taxes on sources when crediting interest income more than Rs 40,000 for all depositors, while for senior tax citizens are determined if income exceeds Rs 50,000 per year.
RBI can also withdraw regulations that do not allow bank interest rates to be determined according to the wise demographics, the report said.
Meanwhile, the record also said that the Bank faced “significant margin pressure” at this time due to excess liquidity in the system.
In addition, it may be difficult for banks to maintain deposits with them going forward, especially after leaving the equity market and opening of bonds to the general public, said a better report, the report said.
(With input from agency)