Yes Bank’s rescue deepens worries about Indian finance

INDIA, WHICH has few declared cases of covid-19, has not escaped the turmoil in global markets. On March 9th its stockmarkets suffered their biggest one-day fall in absolute terms ever, notwithstanding the positive impact low oil prices should have on a big energy importer. Its problems go beyond people’s health.

On March 6th a different crisis came to a head when a government-controlled but publicly listed lender, State Bank of India (SBI), threw a lifeline to Yes Bank, once a darling of the stockmarket, which now faced a scramble to withdraw deposits. It was India’s second banking scare in six months. It raises questions about who is safeguarding the financial system.

Yes’s problems are hardly new. As far back as 2013 concerns were raised by a small group of sceptics at the Reserve Bank of India (RBI), the central bank, that Yes, then a nine-year-old institution, had grown at an extraordinary rate while reporting only a trivial number of bad loans, even though it lent to some of India’s most troubled companies.

Its name was widely understood to contrast it with stodgier operators too willing to say “no”. Investors were entranced. Yes’s share price went on a tear. At its peak in 2017 it was valued at $13.4bn, making its co-founder and chief executive, Rana Kapoor, a billionaire.

By 2019 reality had set in...

via The Economist: Finance and economics Business Feeds

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