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Yes Bank crisis ignites talk of corruption and crony capitalism

Indian lenders' $120bn in problem loans points to economywide issues

Police stand guard as people wait outside a Yes Bank branch in Ahmedabad on March 6, after India's central bank imposed a withdrawal limit of 50,000 rupees.   © Reuters

BANGALORE -- The latest Reserve Bank of India takeover of a commercial lender shows a banking system teetering under massive bad loans, a financial system rife with corruption and an economy in thrall to crony capitalists, economists say.

The Indian central bank last week rescued Mumbai-headquartered Yes Bank, citing the lender's inability to raise capital and cope with potential nonperforming loans. The RBI also froze most of the bank's transactions, limiting depositor withdrawals to 50,000 rupees ($673) and barring it from extending new loans, making investments or making payments.

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