Indian Lenders Face Debt Reckoning Due to Coronavirus Lockdown

India’s banks and shadow lenders face a surge in bad debts from the nationwide economic lockdown aimed at combating the coronavirus outbreak, risking a wave of corporate defaults, the Financial Times reported. Rating agencies and analysts are concerned the strict, 21-day lockdown imposed by Prime Minister Narendra Modi — which has shut down all but the most essential economic activity — has threatened the health of the banking sector, particularly the 10,000 or so less-regulated shadow lenders. Shadow banks have benefited from rapid growth over the past decade by serving clients shut out of the formal financial system with smaller loans for everything from new machinery to trucks to mortgages. They account for a fifth of all new credit creation and analysts believe they could be hardest hit by the pandemic. Read more