Here's how the IL&FS crisis spread to NBFC stocks in Indian markets

With over 348 subsidiaries, IL&FS is said to have funnelled money, raised either from the debt market or banks, to these subsidiaries as a form of equity investment

Advait Rao Palepu explains how the crisis at IL&FS spread to NBFC stocks.  

What caused the recent sell-off in equity markets, particularly in non-banking financial company (NBFC) stocks? 

Over the past two to three years, NBFCs have over-borrowed funds from the commercial paper (CP) market, which, regulators and analysts believe, has led to asset-liability management (ALM) mismatches. That is, they are borrowing funds in the short-term debt market while servicing loans, like mortgages or term loans, that are long-term in nature. According to analyst reports, as of March 2018 around 74 per cent of funds raised by NBFCs came from