Shadow Bank Crackdown Accelerates in India Amid Cash Squeeze
- Permit cancellations jump eight-fold as rules become stringent
- RBI is tightening compliance requirements to ward off risks
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India is stamping out shadow financiers at the fastest pace in recent years, in the latest blow to a beleaguered sector battling a prolonged funding crunch due to rising wariness toward it in the nation’s credit markets.
The central bank canceled registrations of 1,851 non-bank finance companies in the year ended March 31, more than 8 times those in the previous year, according to data received from the Reserve Bank of India in response to a Right to Information request. The number of lenders dropped to about 9,700, the lowest in at least a decade, as a result. Firms may be failing to secure the minimum funds needed to operate due to the cash crunch.