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Modi Dawdles on Reform Even After Biggest India Bank Failure

  • Yes Bank rescue highlights need for transparency, analysts say
  • Social unrest combined with economic pain raising concerns
India Seizes Embattled Yes Bank After Capital Raising Plans Fail
Photographer: Dhiraj Singh/Bloomberg
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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.