Indian banks to gain $36 billion in deposits as funds get taxed | Mint Primer | Mint

The decision made by India to begin taxing returns from fixed-income mutual funds is expected to strengthen the country's lenders' efforts to attract deposits. This will help in financing a revival in the country's credit growth and increase profits. The nation scrapping tax incentives for some debt mutual funds has paved the way for banks to garner as much as $36 billion in deposits from the asset managers, according to Sunil Mehta, chief executive officer of Indian Banks’ Association, a lenders’ lobbying body. The move comes as a respite for the financiers as the widening gap between credit off-take and deposits has sparked risks of asset-liability mismatches and pushed up funding costs.