Expectations
1. Norms for fixed deposits eligible for tax benefit u/s 80C could be relaxed from 5 years to 3 years to bring on par with equity linked saving schemes.
2. NPA provisions may be allowed for full tax deductibility.
3. Further clarity on issuing new Banking licenses.
4. Increase in foreign limit (from 26% to 49%) in Insurance sector.
5. Affordable housing may be assigned as Infrastructure status.
6. Large investment in infrastructure space may be announced.
7. Government borrowing programme may be lowered.
Impact -
1. Positive for the banks to raise long term fund and will also help in their ALM profile.
2. Positive for the entire BFSI.
3. Positive for new entities, competition may increase among the banks as a result, consumer may be benefited.
4. Positive for the insurance companies. Increase in foreign limit will bring them closer to listing.
5. Positive for low cost housing finance companies like LICHF, Dewan housing Ltd, Gruh finance Ltd and also for those banks which have large exposure in housing segment like SBI, ICICI Bank as clearances and sanctions to finance projects will be easier and cheaper.
6. Positive for the Infrastructure finance Companies like IDFC, HDFC etc.
7. Positive for the banks as lower borrowing will ease the pressure of liquidity in the banking system.
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