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Shadow Bank Crisis in India Pushes Up Funding Costs Overseas

  • Non-bank finance firm overseas borrowings have dropped in 2019
  • The lenders are key to various borrowers in India’s economy
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Photographer: Brent Lewin/Bloomberg
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India’s shadow banks are getting increasingly squeezed by a crisis of confidence at home, forcing them to cough up more for funds overseas. And that’s just for the lucky ones.

The non-bank financing companies have struggled to raise as much abroad this year, as defaults in India’s credit market spread after a shock failure by major shadow lender IL&FS Group last year. They’ve signed $1.5 billion of foreign-currency loans so far in 2019, down from $2 billion in the same period last year, according to data compiled by Bloomberg that excludes state-run lenders.