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•64% Informative
Despite moral hazard, central banks have no choice but to save banks, says Ravi Agrawal.
Most Indians continue to save through bank deposits, and if there is a bank failure then the trust’ in the banking system breaks down.
The last major bank failure in India was Palai Central Bank in 1960.
The key difference between India and the U.S. is that Indian banks cannot be dealt with under bankruptcy laws.
The way that the RBI has dealt with errant banks and promoters of banks recently seems to be a sign of things to come.
Earlier, the central bank used to levy fines for any failures to adhere with norms.
This approach by the RBI, in the absence of a law that deals with failure of banks, allows for tailored solutions that quickly work to prevent a systemic episode.
VR Score
71
Informative language
76
Neutral language
46
Article tone
informal
Language
English
Language complexity
45
Offensive language
not offensive
Hate speech
not hateful
Attention-grabbing headline
detected
Known propaganda techniques
not detected
Time-value
medium-lived
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no external sources
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