The emblem of the Reserve Bank of India is a tiger standing under a palm tree. The central bank has been living up to its image lately, baring its teeth at an attempt by Narendra Modi’s government to threaten its independence over whether India’s banks are lending enough.

The tiger sheathed its claws on Monday, reaching a truce with the finance ministry on its policies towards state banks and how much of its reserves to pay to the government. But this does not resolve the battle that has broken out over the rapid growth of India’s shadow banking system — its thousands of consumer credit, asset finance and property lending companies.

It erupted in September when IL&FS, a project finance group, defaulted on part of its $13bn debt despite its investment grade rating. Since then, other non-bank financials have faced intense scrutiny, both over their asset quality and whether their funding is stable. The crisis could curtail lending and growth in the run-up to next spring’s elections, upsetting Mr Modi’s allies.