Why has India's mega public sector banks merger plan failed to lure funds?

India’s biggest bank overhaul in decades to merge state-run lenders beset with bad loans and low capital hasn’t convinced investors to increase holdings of the shares.

Fund managers including Aberdeen Standard Investments Ltd. and JPMorgan Chase & Co. are shying away from increasing their positions in government-owned lenders. As well as poor asset quality at the banks, they cited uncertainty about the mergers’ time-line.

A prolonged shadow-banking crisis and hurdles in bankruptcy rules have left India holding the world’s worst bad-debt pile. Seeking to spur lending needed to revive economic growth from a six-year low, Prime Minister Narendra Modi’s government