IL&FS crisis may lead to consolidation in NBFC sector: Fitch Ratings

The debt crisis in IL&FS has adversely impacted growth of the NBFC sector in India and might lead to its consolidation, said a report by Fitch Ratings on shadow banking.

Non-banking financial companies (NBFCs) are commonly referred to as the shadow banking sector.

The report comes against the backdrop of the Reserve Bank of India's decision to create a specialised cadre to supervise and regulate the financial sector, including banks and NBFCs.

The Indian shadow banking industry's rapid growth and reliance on short-term funding sources "bubbled over" in 2018, most evident by the default of Infrastructure Leasing and Financial Services (IL&FS) in September