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The Big Story: Yes men
A major private Indian bank went belly up last week. It didn’t fail – but only because the Indian government did not let it.
Yes Bank, the country’s fourth-largest private lender, had its board suspended by the Reserve Bank of India, which regulates the sector. While the RBI announced a draft reconstruction plan, the bank was put under moratorium: account holders were prohibited from withdrawing more than Rs 50,000.
That proposal is, essentially, government-funded resuscitation. The State Bank of India will invest at least Rs 2,500 crore in the hope of reviving the bank, which had a loan book of Rs 3 lakh crore. Read my quick explainer on what exactly happened here.
What does the failure of such a big bank tell us about India’s economy and financial sector?
“I shall not allow any institution to fall off the cliff,” said Finance Minister Nirmala Sitharaman at a press conference soon after the bank was put under the RBI moratorium. The question, however, is...
