Italy has set a one-off 40% tax on profits derived from higher interest rates after reproaching lenders for not rewarding deposits.

Higher official interest rates have led to record profits for banks, with loan costs skyrocketing as lenders held off paying more on deposits, Reuters reports.

Windfall taxes on the sector have already been imposed in other countries such as Spain and Hungary, and others may now do the same.

The idea was mooted by the government earlier this year but didn't come to fruition at the time.

Indeed, a senior banking executive informed Reuters that lenders had been ready for "the chopping block, but then the axe didn't come down."

Yet ever since, the issue has returned to the fore following strong first-half results.

The move was even a surprise to some ministers during the cabinet meeting earlier in the week, according to a government source, with another saying the government aimed "to punish banks' unfair behaviour."

Italy's lenders have passed on average 12% of the rise in rates to depositors, compared to 22% in the euro area, according to Jefferies.

"One has only to look at banks' first-half profits ... to realise that we are not talking about a few million, but ... of billions," said Deputy Prime Minister Matteo Salvini during a news conference on Monday.

"If (it is true that) the burden deriving from the cost of money has ... doubled for households and businesses, what current account holders receive has certainly not doubled," Salvini stated.

The banking share index plummeted 7.3% on Tuesday, with Italian banks bringing down the European Index by 3.7%. 

Italy's banks are up 50% over the last year, the Reuters report adds, exceeding a 20% rise in the European sector.

The tax will be applied just in 2023, with banks paying the sums by 30th June next year. The measure pertains to the net interest margin, a measure of income arising from the gap between lending and deposit rates.