At the times when tax returns are of prime importance for every tax payer, commercial banks are planning to promote their tax saving products such as fixed deposits and equity-linked saving schemes (ELSS).
Traditionally tax saving products mainly consisted of instruments belonging to the insurance sector but now banks are coming forward to compete with the sector and therefore planning to aggressively market their products.
A senior official with the State Bank of India said, "Earlier, we were not very aggressive in marketing our tax-saving products as major investment tools. But now we have to devise new strategies as insurance companies have modified their marketing techniques."
Now days, the insurance companies are increasing promoting their products as investment options rather than risk cover tools. So to counter these firms, banks have decided to increase their reach in the segment and provide wider options to the consumers.
Presently, banks tax-saving products are not very popular amongst the investors. Tax saving fixed deposit constitute only 1% to 3% of the total fixed deposits of the banks and ELSS have not yet gained importance in the list of tax saving products.
Besides SBI there are three more public sector banks that are planning to market their tax saving products as better investment avenues. The new marketing strategies will attract the investors' attention towards the difference between their tax-savings products and instruments offered by the insurance firms. They will highlight on the factors like returns on FDs and ELSS are not based on the investor's age unlike the life insurance products. Normally the life insurance companies charge higher premium from the people who are above a certain age.
"We would like to bring this and many other factors to the prospective investor's notice while marketing our product," said an official from a public sector bank. Moreover an official at another PSU bank informed that his bank is appointing special staff for guiding the prospective investors and promoting its various tax-saving products.
MetLife Managing Director, Rajesh Relan said, "Traditionally, life insurance has been viewed as an instrument for both stable returns and risk cover. The recent market volatility has brought the stable ‘investment' aspect of insurance to fore once again."
At present all major life insurance companies such as Life Insurance Corporation, ICICI Prudential, Max New York Life and MetLife are placing their products as excellent investment options rather than just an insurance scheme. Some of them are offering an annual return of as high as 10% on their schemes.