India’s shadow banks, non-bank financial groups such as Indiabulls and Dewan Housing Finance, are in crisis, setting off alarms for investors and analysts that could affect the country’s conventional banks and real estate companies. 

The Reserve Bank of India cautions that failure of largest NBFCs and housing finance companies could cause two banks to default.

According to the Finance Industry Development Council Shadow, banks have reduced their lending by approximately a third, sparking a credit crunch that affects cars to housing sales. In response, authorities will provide a $10 billion recapitalization of public banks to reinitiate liquidity.

Analysts see similarities to the bursting of the 2008 U.S. housing crisis, which spun into the global financial crisis.

TREND FORECAST: India, a nation choking to death from record levels of air pollution, which spread far beyond its borders, is also suffocating under loads of subprime junk debt. 

As we’ve reported in the Trends Journal, from car sales to retail sales, India’s economy is in decline and will continue to fall lower.

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