What the Budget holds for banking & insurance

Updated: Mar 1 2006, 05:30am hrs
Measures

Conversion of over Rs 22,000 crore non-tradeable special securities into tradeable, SLR GoI dated securities

Hiking the exposure limit of FII investment in gilts from $1.75 billion to $2billion and in corporate debt from $0.5 billion to $1.5 billion

Launching of single unified exchange traded market for corporate bonds and allowing mutual funds, pension and provident fund players in the NDS platform

Service tax on ATM transactions and higher tax on insurance risk premium increased from 10% to 12%

No time frame for amending Insurance act and passing PFRDA Bill

Implications

The move will facilitate increased access for banks to additional resources for lending to productive sectors to meet the increasing credit needs of the economy

Higher liquidity and help maintaining benign interest rates

The moves will facilitate deepening of volumes and better price discovery

Cost burden may be passed to the customers

Fresh investment for this sector will be deferred