Due to the current environment in the banking sector, many people have been leaning towards bonds which offer around 12% interest – a higher than that offered against bank deposits. So, there is pressure related to deposits in banks.

On the one hand, there is pressure related to liquidity in the banking sector but it has not reached a crisis. Besides, at present banks are not interested in giving loans because of high interest rates and security.

Therefore, to encourage large depositors, the excise duty has been proposed to be simplified compared to the earlier system. Big depositors are given a little discount so that banks benefit by attracting more deposits. The banks will benefit because people will deposit more money in their accounts due to the reduced excise rate.

Large depositors are taxed relatively less than small depositors. This has been done so that no liquidity crisis in the banks arises in the coming days, and people get encouraged to keep more money in the banks.

On the other hand, the same duty has been waived in banks’ offshore units to bring more dollars into the country. Foreigners who have accounts in offshore banking units should have more dollars in their accounts. This will reduce pressure on reserves.