Shadow banking crisis is now starting to hit India's consumers
Publish on : 2018-11-29 10:47:29
Karan Dua, an electronics shop owner in south-central Mumbai, placed his hope of crackling sales on Diwali --
the 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 more more cautious about extending new credit
amid a funding crunch of its own.
Loan volumes for some of these lenders dropped to 10 per cent of the levels seen before defaults by a troubled
financier from August onward made it costlier for all non-bank financial companies to raise funds, according to
Indostar Capital Finance Pvt. which makes loans to companies, and individuals for home and vehicle purchases.
The cash crunch for the industry came at the start of the peak shopping season in India, threatening
consumption, which is the backbone of the economy, say economists.
Source :- Economic Times