A cautionary tale for banking in Reliance Capital’s collapse3 min read 01 Dec 2021, 11:00 PM IST
The episode exemplifies why easing bank-licence issuance is risky
The crisis of confidence that erupted in India’s shadow banking industry in 2018 has claimed its most high-profile casualty yet. On Monday evening, the Reserve Bank of India (RBI) said that it had superseded the board of a financier controlled by Anil Ambani, the younger brother of India’s richest man, appointed an administrator, and would soon be sending the firm to the bankruptcy tribunal. The unravelling of Reliance Capital Ltd shows why RBI remains reluctant to allow big business groups into mom-and-pop banking, despite facing pressure to allow a wave of corporate capital into the industry and reignite credit growth.