Economics
Worst Liquidity Crunch in Two Years Spooks Indian Financiers
- That’s adding to pain as IL&FS defaults drive up debt yields
- Financial system liquidity at 1.4 trillion rupee deficit: data
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The worst liquidity crunch in India’s banking system in more than two years is adding to refinancing risks for shadow banks shaken by a rare default in the country’s money markets.
A debt crisis at Infrastructure Leasing & Financial Services Ltd., an Indian conglomerate that’s missed payments on more than five obligations since August, is stoking borrowing costs in credit markets. That’s making for a double whammy, as central bank steps to prop up a weakening rupee have sopped up liquidity and as recent corporate tax payments had already left less cash in the financial system.