More defaults on cards? Realty cash crunch threatens stressed shadow banks

For shadow banks, defaults would raise the risk of a repeat of last year's funding freeze

India’s property developers are finding it hard to borrow money, raising the prospect of a wave of debt defaults from the sector hitting shadow lenders that are trying to survive a funding crunch of their own.

Developers have to repay about Rs 1.29 trillion  a year on outstanding debt but generate less than half the amount in income that can be used for repayments, according to an analysis of about 11,000 companies by research firm Liases Foras. Rolling over loans and tapping private-equity funds will be a struggle for all but the established names, like Oberoi Realty Ltd. and Godrej Properties