Indian Banks to Gain $36 Billion in Deposits as Funds Get Taxed

India’s decision to tax returns from fixed-income mutual funds is set to bolster its lenders’ efforts to lure deposits for financing a resurgent credit growth and boost 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 ...