Economics
India’s Path Out of Pandemic Slump Hobbled by Shadow Bank Crisis
- Lenders are curbing credit at time when economy needs it most
- Bad loans are set to pick up as economic growth stalls
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In the second week of April, deep into India’s initial 21-day lockdown to curtail the spread of the coronavirus, senior officials at Bajaj Finance Ltd. held a conference call. The prognosis wasn’t good.
In just 10 days the keystone shadow lender had lost 350,000 customers and almost 50 billion rupees ($651 million) in assets under management. Small and medium enterprises were under strain and it was considering setting aside money for losses in case large borrowers went under.