INSUBCONTINENT EXCLUSIVE:
The premium that investors demand to hold shadow lender bonds over sovereign notes is persistently highThe health of shadow banks remained
weak last month as a credit crisis continued to sting.Among four indicators compiled by Bloomberg News covering areas including liquidity
and share performance, three were stuck in the same position as the previous month, with two at levels indicating weakness.Another gauge
showed total outstanding debt increased at 50 financial firms and other companies impacted by the crisis, as banking-system liquidity
remained buoyant given the central bank's monetary easing.To be sure, the absolute amount of outstanding debt wasn't at alarming levels,
and access to credit markets for healthier financiers could help get money flowing more efficiently again -- just what the flagging economy
But if more troubled borrowers continue to add rather than pare borrowings, that could prolong the crisis.Authorities have taken more steps
recently to help the shadow bank sector, which plays a vital role in getting money to everyone from small merchants to property tycoons
Some observers see an extended battle, as the nation's slowing economy complicates those efforts.Moody's Investors Service recently
warned that a prolonged credit squeeze among India's financiers may worsen, just as S-P Global Ratings said risks of contagion are rising
The premium that investors demand to hold shadow lender bonds over sovereign notes is persistently high and a custom gauge of shares of 20
financial firms and other companies impacted by the crisis remained sluggish.To help creditors recover their money quickly from troubled
shadow lenders, the government last week unveiled insolvency rules
The more than 15-month-old credit crisis has choked economic growth to its slowest pace in six years and company defaults on rupee bonds are
Dewan Housing Finance Corp
and Altico Capital India Ltd
are among lenders that defaulted this year, adding to the risk-off sentiment in local markets.The scores attached to each of the indicators
have been calculated by Bloomberg by normalizing the deviation of the latest value of the indicator from its yearly average and have been
assigned on a scale of 1 to 7, with 1 implying weakness and 7 showing strength.Get Breaking news, live coverage, and Latest News from India
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