As NBFCs face a crisis, the government can not afford to stand aside

There are serious concerns over the effects of a credit freeze-up

Is the crisis in IL&FS a sign that India has a shadow banking problem? The markets surely think so, as was evident in the panic selling on Friday and Monday. Several non-banking financial companies (NBFCs) were particular targets for selling, reflecting genuine questions about the expansion of lending by NBFCs in the past years that may have stressed their books. A series of defaults by IL&FS subsidiaries has caused questions to be asked as to whether the defaults will ripple through the NBFC sector. Baffled by the rapid downgrades of IL&FS debt paper — from triple-A to ‘D’ (or default)