Such a reasonable expectation is not only justified on the considerations of reputational risk and the concept of “holding out’ or backing, but also by the obligations discharged in the past by the Government of India, in several cases; some of them at the instance of regulator concerned.
In some cases, banks and financial institutions seek and obtain instructions for direct debit of dues to them from government accounts to ensure the timely recovery of dues to them and thus bring about comfort through credit enhancement.