IL&FS crisis: How the end of an easy money era is causing strain in India

There's more pain to come as global interest rates rise and the RBI proceeds with its own tightening

A crisis at one of India’s biggest infrastructure financiers is the latest example of how the end of an easy money era is causing strain in the world’s fastest-growing economy.

Rising borrowing costs are putting pressure on lenders like Infrastructure Leasing & Financial Services Ltd. -- whose recent debt defaults rocked financial markets in India and sparked fears of a contagion -- as well as on debt-focused mutual funds that are liquidating holdings.

There’s more pain to come as global interest rates rise and the Reserve Bank of India proceeds with its own tightening, with most economists expecting a 25 basis-points hike