Why allowing weak state-run banks to lend again could unwind RBI's autonomy

State-run lenders control 70% of India's banking system assets, and 11 out of 21 of them are facing regulatory lending curbs

After sending two pesky central bank governors packing in a little over two years, Indian bureaucrats have turned their attention to unwinding the monetary authority’s autonomy.

Their first move, unveiled Thursday, is an innocuous – even laudable – infusion of Rs 410 billion ($5.9 billion) into troubled state-run lenders, bumping up this fiscal year’s outlay for bank recapitalization by 63 per cent to Rs 1.06 trillion. The fresh capital partially replaces a shortfall in the Rs 2.11 trillion bank recap announced in October last year. 

But rather than split hairs, investors should worry about what comes next: a jailbreak for four or