Steep hike in deposit insurance triggered by PMC

Expanse covered by the Budget liked by many, says the Finance Minister

February 07, 2020 10:47 pm | Updated 10:47 pm IST - MUMBAI

Finance Minister Nirmala Sitaraman with Secretaries of the Finance Department, on Friday. Arunangsu Roy Chowdhury

Finance Minister Nirmala Sitaraman with Secretaries of the Finance Department, on Friday. Arunangsu Roy Chowdhury

The trauma and hardships faced by thousands of depositors of the scam-hit Mumbai-based Punjab & Maharashtra Co-operative Bank had led to the fivefold increase in deposit insurance for bank account holders announced in the recent Budget.

Speaking at a press conference here, Union Minister for Finance and Corporate Affairs Nirmala Sitharaman said, “I do remember the last time I came to Mumbai was at the peak of the Punjab Maharashtra Co-op Bank problem. It was heart-wrenching. We did go back and spend a lot of time making sure that we do the needful.”

“And it was announced in the Budget that we have increased the deposit insurance from ₹1 lakh to ₹5 lakh. Now, I am in Mumbai, this is one point I wanted to say,” she said, answering a question from The Hindu.

The Finance Minister was in Mumbai on Friday to meet industrialists, economists, academicians, CAs and tax planners to have their feedback on the Budget.

On the feedback she had received from several meetings, the Minister said the expanse that the Budget had covered was something which most people had liked. “It is very inspiring for me and for the entire team to do more dedicated, intense work. I am not getting carried away by this [the good response]. You can cross check,” the FM said.

She said the attention given in the Budget to rural India, agriculture and specifically the 16 action points, and the steps to deepen the bond market has been received very well.

“We have taken steps to make sure that Indices look at India so that we can get indexed for the bonds that we want to create. We have also taken steps to give life back to MSMEs and to handle their NPA problem,” she said.

She said it was heartening that the Reserve Bank of India had come clear on being supportive of the MSMEs which was the need of the hour. “I am glad that the RBI is being dynamic enough to support this. They have given a very very exhaustive thinking about this and responded in a timely fashion.”

The ways in which income tax has been given an alternative has also been appreciated, she added.

On the IPO for LIC, she said, “The IPO will bring retail investors into the picture and in a way, will bring transparency [in the organisation].

The intent of the current government is to move towards simplification of the tax regime, she added.

“We are coming up with steps to simplify the tax regime. We have shown our intent to move towards a simplified tax regime and corporate tax simplification and reduction is a move towards that. The taxpayer charter [as announced in the Budget] is based on trust that should be there between the taxation regime and taxpayers,” she said.

When asked about exemptions, she said, “The Indian investor is capable of deciding where to put money without being directed by anyone, and that is the principle through which we have decided the matters. Eventually, we want to have an income tax framework with low tax rates and easy compliance.”

(With inputs from Piyush Pandey)

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