Shadow-bank bust: Money market doesn't know the extent of IL&FS toxicity

India is marking the 10th anniversary of the 2008 global financial crisis with its own mini-Lehman moment.

True to script, ratings companies have belatedly realized that the IL&FS Group — Infrastructure Leasing & Financial Services Ltd. and its associates — is woefully short of liquidity, with about $500 million in repayments coming due in the second half of its fiscal year through March and only about $27 million available. The group, which missed a payment in the commercial-paper market last month, is now late in servicing an inter-corporate deposit.

Shocks are starting to reverberate amid an avalanche of ratings downgrades.