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India's Cash-for-Gold Shadow Lenders May Be Headed for Shakeout

  • India consumer lenders’ market values exceed their loan books
  • Best-performing India fund to cut exposure to non-bank lenders
Gold jewelry sit in a window display at a G. M. Gold store in Mumbai, India, on Monday, Apr. 23, 2012.
Photographer: Dhiraj Singh/Bloomberg
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A shakeout may be looming for investors in India’s enormous cash-for-gold and personal finance shadow-lending firms. 

Three of the largest, trading with market values of more than $1.5 billion, may be facing an imminent plunge in their share prices after becoming overvalued, according to IIFL Asset Management Co., whose investments in the firms helped make its fund the country’s best performer, and analysts at Credit Suisse Group AG.