Economics
Shadow Banking Crisis Is Starting to Hit India's Consumers
- Industry veteran says NBFCs are cutting lending considerably
- Economists expect consumption to drag down overall growth
Photographer: Prashanth Vishwanathan/Bloomberg
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Karan Dua, an electronics shop owner in south-central Mumbai, placed his hope of crackling sales on Diwali -- the Hindu festival of lights when Indians splurge on everything from clothes to cars and jewelry to houses.
It hardly lit up business for the 35-year-old shop owner. Businesses like Dua’s are seeing sluggish sales this festive season in part because India’s shadow lending industry, which accounted for nearly 4 out of every 10 consumer loans in the last three years, has grown more more cautious about extending new credit amid a funding crunch of its own.