India: IL&FS saga sets stage for tighter regulations for non-bank financiers

India: IL&FS saga sets stage for tighter regulations for non-bank financiers

Photo: Reuters

The fastest pace of growth since 2013 at India’s non-bank financiers is about to come to a grinding halt.

A spate of money market defaults by Infrastructure Leasing & Financial Services Ltd. has put the spotlight on non-bank finance companies. With banks struggling with bad loans and low capital buffers, non-bank lenders had rushed to tap demand for long-term financing to build roads, power plants and homes. But these lenders borrowed from the short-term money markets to finance long-term loans, raising the risk of defaults should cash flows take a hit.

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