India’s shadow lenders are facing a fresh threat, just as they were starting to recover from the fallout of landmark defaults last year by one of their own, Bloomberg News reported. The lenders could come up against a new cash shortage, if concerns about debt at conglomerate Essel Group ricochet through India’s money markets, according to Citibank and Credit Suisse. There’s reason to think that may happen, the argument goes, after Essel’s billionaire founder Subhash Chandra said on Friday that it has increased debt levels and a diminished ability to service borrowings.

India’s largest lender is finding fear can be a potent weapon in recovering loans. With 1.8 trillion rupees ($25 billion) in bad corporate debt to clean up, State Bank of India is having an easier time negotiating with founders keen to avoid the nation’s two-year-old bankruptcy law, according to Anshula Kant, a managing director overseeing stressed assets at the lender, Bloomberg News reported. That’s because a crackdown by policy makers has convinced business owners that they risk losing their companies once the courts become involved.

India’s economic activity showed signs of slowing in December, belying hopes of a quick turnaround suggested by the previous month’s data. A gauge measuring overall activity, or “animal spirits”, moved two notches lower in December from a month ago, underpinning a view that India’s growth has slowed and it might need a dose of fiscal and monetary stimulus to boost demand, Bloomberg News reported. The indicator, compiled by Bloomberg, reflects a pullback in new orders and business activity, as well as easing inflationary pressures.

Jet Airways India Ltd., the carrier that is struggling under a pile of debt, may get some respite. India’s largest lender State Bank of India is set to swap part of its loans into a stake of at least 15 percent in Jet Airways, people with knowledge of the matter said. Other creditors to the carrier also plan similar conversions of some debt into equity to help keep the carrier alive, they said.

India’s bankruptcy court said on Tuesday creditors could reject a $7.5 billion offer from the owners of debt-stricken Essar Steel to settle the company’s debts, giving a boost to global steel giant ArcelorMittal’s bid to takeover the plant, Reuters reported. The settlement proposal presented to the consortium of lenders by the billionaire Ruia family was not “maintainable”, and it would not be illegal for the banks to reject the offer, the National Company Law Tribunal (NCLT) said, according to television news channels.

Bank of India Ltd aims to return to profit in the January-March quarter as it focuses on reducing bad loans, its chief executive said on Monday, after the state-run lender logged its biggest quarterly loss since at least 2005, Reuters reported. A spike in bad loan provisions dragged the bank to a net loss here of 47.38 billion rupees ($666.50 million) in the three months ended Dec. 31. In the same period the year before, it registered a loss of 23.41 billion rupees.

In a related story, Bloomberg News reported that many global funds have pushed for India to resolve its bankruptcy cases faster, but some investors are finding opportunities in the delays. As Indian lenders seek to offload soured debt worth billions of dollars, overseas firms such as Cantor Fitzgerald and SC Lowy see the chance for investors to reap returns from delays in the bankruptcy process.

India’s Supreme Court on Friday rejected petitions challenging the country’s bankruptcy laws, including a rule that bans owners of insolvent firms from bidding to buy back assets auctioned as part of the bankruptcy proceedings, Reuters reported. The ruling upheld fledgling bankruptcy and insolvency rules and is expected to pave the way for banks to recover billions of dollars from bankrupt firms mired in litigation, lawyers said.

First, it was the IL&FS Group that ran out of money. Now that the bankrupt Indian infrastructure lender-operator has been sequestered from creditors, the country’s securitization industry is on borrowed time, a Bloomberg View reported. It all began on Tuesday with S&P Global’s Indian affiliate, Crisil, downgrading Jharkhand Road Projects Implementation Co.’s annuity-backed bonds to D after it skipped interest and principal payments. It’s a strategic default on an instrument rated AA just last week. The borrower had money.

Cash-strapped Jet Airways Ltd has flown straight into a storm, resulting in a major setback for India’s largest full-service airline that could shake up the country’s aviation industry, Reuters reported. Jet, which has debt exceeding 80 billion rupees ($1.12 billion) as of September-end, has been steadily losing market share to its rival and low-cost carrier IndiGo, which is owned by InterGlobe Aviation Ltd. Abu Dhabi-based Etihad Airways, Jet’s second-largest shareholder, is now in talks with creditors for a deal that could help the airline back on its feet.