India’s worsening banking problems are adding a new layer of complexity to the central bank’s monetary policy as it prepares to cut interest rates again to spur economic growth.

The Reserve Bank of India is set to lower its benchmark repurchase rate for a fifth time this year on Friday, days after it issued a statement to reassure the public that the banking system is “safe and stable.” It recently imposed withdrawal curbs on a small bank and lending restrictions on another lender...........ET