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Modi’s Bank Bailouts May Distract Focus From Growth Slump

  • Amalgamation may need rest of the financial year through March
  • Indian banks’ employee unions threaten protests and strikes
Narendra Modi

Narendra Modi

Photographer: T. Narayan/Bloomberg
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India’s biggest bank overhaul in decades may hurt the nation’s bad loan clean-up and slow the lending approvals needed to reverse its economic slump.

Prime Minister Narendra Modi’s government late Friday surprised observers by announcing several state bank mergers, a move it said would create larger, healthier lenders. While that may be true in the long term, analysts predict that the efforts may be hurt by a near-term shift in management attention to aligning resources such as personnel, technology and branch networks.