Banks will gain US$ 36 billion in deposits as government scraps tax incentives for debt mutual funds
- IBEF
- March 28, 2023
India's decision to tax fixed-income mutual fund returns is expected to support efforts by its lenders to attract deposits for funding a rebound in credit growth and increase profits. According to Mr. Sunil Mehta, the Head of the Indian Banks' Association, the country's decision to eliminate tax benefits for some debt mutual funds has opened the door for banks to receive deposits from asset managers totalling up to US$ 36 billion.
The action provides relief for the financiers because the growing gap between credit demand and deposits has raised financing costs and raised risks of asset-liability mismatches.
According to statistics from the Reserve Bank of India, increased loan demand from businesses and consumers has boosted annual credit growth to 15.7% as of March, up from a five-year average of 10.3%.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Partners
