July 13, 2018 Yes Institute

Centre needs to rationalise rates on banking services

Author : Rana Kapoor, MD & CEO, YES BANK and Chairman, YES Global Institute

Note: This article appeared in DNA on July 3, 2018

As the nation celebrates the completion of a year of implementation of the iconic Goods and Service Tax (GST) regime, it would be a timely exercise to evaluate the first outing, of what is probably the biggest reform that India has seen since Independence and most certainly post liberalization.  One nation, one tax is truly a powerful idea, and like any change, it faced some teething troubles and an initial resistance. New modalities and structures needed to be put in place and an overhaul of the IT systems, along with sustained sociological and behavioral outreach campaigns were required.

Banks conducted workshops across the length and breadth of the country fostering true industry and academia collaborations to inform and educate entrepreneurs and businesses alike about the intricacies of the new tax regime and how to scale up. As over 42 lakh MSMEs registered themselves for GST, the flow of finance into the sector not only stabilized, it also gave impetus to the creation of new products and solutions, thereby widening the sphere of business, and help bring newer customers into the fold.

This also meant banks and financial institutions, had to think fast, innovatively and with creativity.

As the tax collection under GST has shown steady increase and is hovering progressively around INR 1 lakh crore, the time is right for consolidation of the GST regime with technology led interventions and rationalization of the rates.

GST 2.0 Way forward recommendations:

Rationalize the rates of banking services, which have now become taxable to continuously drive the uptake of service exports. Creation of slabs for rationalizing the GST levied on the default on loan payments and credit card late payments to decrease the load on consumers.

Reconstruct the assessment and adjudication of cases around GST. Since GST is a federal tax, its assessment would be done by the respective state regulators under which the respective branch is registered.

Reinforce GST with new age technology for better governance and credit uptake.


The financial Sector is set to be revolutionized by technology, like a good disruptor and an iconic reform with far reaching effects GST catalyzed technology adoption.How we transact, do business, profile customers, explore and expand relationships and the pie in the process, customize service offerings, our IT systems and operations will never be the same again.