India’s messy banking system has long been a source of friction between Prime Minister Narendra Modi’s government and the central bank. But even the collapse of the nation’s fourth-largest lender isn’t spurring any urgency to clean things up.
The 72.5 billion rupee ($980 million) rescue of Yes Bank Ltd. -- the nation’s biggest-ever banking failure -- has refocused attention on the Reserve Bank of India’s regulatory autonomy. While analysts have highlighted the need for the government to fast-track long-delayed legislation to tackle bad loans while allowing banks to fail without inducing system-wide panic, no legislation is imminent.
