Investors struggle to cut losses as shadow banking crisis deepens

Trading in NBFC bonds slid to a five-month low of about Rs 75,520 in the secondary market in September, the lowest since April

As India’s shadow banking crisis deepens, it’s getting harder for investors to cut their losses in the sector’s debt.

Mutual funds are in a particularly tough spot, given their large holdings of non-bank financing company bonds. That, in turn, threatens everyone from individual investors to conglomerates with money in the funds, underscoring broader risks to policy makers already grappling with an economic slowdown.

Trading in NBFC bonds slid to a five-month low of about Rs 75,520 ($10.6 billion) in the secondary market in September, the lowest since April, according to data compiled by Bloomberg. The slump comes as mutual funds