Need specific tax programme for savings in banks: Ajay Kanwal

Ajay Kanwal, CEO & MD Jana Small Finance Bank has said that there should be a specific tax program aimed for savings in banks.  In a pre-Budget interview with Republic Business, Kanwal  said this will help bring more cash in the banking system.  Stating that the country has been sharp on fiscal prudence, Kanwal said having a growth-oriented Union Budget is the most likely answer.  

“A specific tax program will help bring more cash in the banking system. The country has been sharp on fiscal prudence and having a growth-oriented Union Budget is the most likely answer,” Kanwal further added. 

On growth-oriented Budget, Kanwal further added: “I think having a growth Budget is the answer we will get. India is in a sweet spot. We have a good tailwind in the way we are growing. A growth Budget is the answer but it won’t keep everyone happy. The government has to choose the right spots where they put the money.” 

Kanwal said: “From the point of view of what the salaried small businesses, retirees would like, if you couple that with growth in cash in the economy which has doubled in the last five to six years to Rs 35 lakh crore, merging the two needs, which is reducing cash, helping salaried persons, all business persons and retirees, we should come out with a specific tax programme for either a time deposit or savings in a bank,”

As per Kawal, this step will give people an advantage. “If you cap the deposit amount or the savings amount, a lot of cash will come in the banking system, which anyway will help the banks for more loans and to create more jobs. 

“I am hoping that there is some help to everyone, a large population. It will reduce the liquidity pressure and at the same time reduce cash and help everyone,” said Kanwal. 

Commenting on steps to stimulate credit growth, Kawal said digital records will help with affordable housing lending. He added that a guarantee programme where banks can participate could be a solution.  

“Digital records will help with affordable housing lending. A guarantee programme where banks can participate could be a solution,” added Kanwal.   

On the need for fiscal prudence, Kanwal added : “We have been sharp on fiscal prudence and I  expect the trend to continue. The balancing act has to be played by the government because everyone has a demand and the government needs to figure out which is a strategic and which is a tactical one and allocate the money accordingly,”

Highlighting strategic divestment of banks, Kanwal said there are many stakeholders who are interested, adding that the government has to show interest for the divestment programme. 

“A large number of people are interested in the divestment process but the ball lies in the court of the government, which has to show interest” added Kanwal.  

On affordable housing, Kanwal said the normal demands are changes in Pradhan Mantri Awas Yojana  (PMAY) and  affordable housing limits, adding that the government should do something more fundamental. 

“We should have an Aadhar kind of address to property. It will free-up a lot of affordable housing funding. Every affordable house generates 130 jobs. With driving towards asset creation, people get jobs. While we talk about tinkering rate we should do something more fundamental. The clarity of paperwork is a big challenge and we must regularise paperwork,” added Kanwal. 

Kanwal said the area of digitisation, where the country is lagging behind needs to be enhanced.  "Being digitally focussed helps the Jana Small Finance Bank bring down cost of operation. “It allows us to try risk models. More people can come into credit boundaries,” added Kanwal. 

Ajay Kanwal’s journey: 

Ajay Kanwal is Jana Small Finance Bank's Chief Executive Officer. He is a veteran consumer and commercial banker with 32 years’ experience in the industry. Ajay was Regional CEO of ASEAN & South Asia at Standard Chartered Bank before joining Janalakshmi as CEO. He also had a short stint as Senior Advisor at TPG and Mastercard. He began his career with Citibank and has held various leadership positions throughout his banking career, including CEO of Taiwan, Regional CEO for North East Asia, and Regional Head of Consumer Banking for South East Asia.

Ajay has served on the board of several companies, including as Chairman of the Board of Standard Chartered Bank (Singapore) Ltd., Director of Standard Chartered Bank (China) Ltd. and Standard Chartered Bank (Korea) Ltd. and Commissioner of PT Bank Permata, among others. Ajay has a Master of Management Studies degree from LNW, Mumbai University and a B.E. (E & TC) from Marathwada University.