S&P Warns of Increased Contagion Risk at Indian Financial Firms
- ‘Solvency shock’ for banks if large shadow lender fails
- Government seen intervening in event of systemic threats
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The risks of contagion are rising in the Indian financial sector and any failure of a large shadow lender could lead to a “solvency shock” to banks, S&P Global Ratings said Wednesday.
India’s shadow lenders get a substantial part of their funding from banks, and the weaker ones have seen a sharp rise in their borrowing costs and a big drop in their equity values, the ratings firm said in a report.