Confidence crisis at home forcing NBFCs to cough up more for funds overseas

The cash squeeze threatens a broader fallout, as the higher cost of funds is passed on to merchants getting micro loans and property tycoons looking to roll over debt

India's shadow banks are getting increasingly squeezed by a crisis of confidence at home, forcing them to cough up more for funds overseas. And that's just for the lucky ones.

The non-bank financing companies have struggled to raise as much abroad this year, as defaults in India's credit market spread after a shock failure by major shadow lender IL&FS Group last year. They've signed $1.5 billion of foreign-currency loans so far in 2019, down from $2 billion in the same period last year, according to data compiled by Bloomberg that excludes state-run lenders.

Average margins jumped to a three-year high of 118