Debt concerns have pushed funding costs for NBFCs to multi-year highs in recent weeks.

"The problems started late last year following shock defaults at shadow lender IL&FS group. Things looked better briefly earlier this year after authorities stepped in to increase liquidity, but more surprises popped up in the past few months. Debt concerns at conglomerate Essel Group and troubles for mortgage lender Dewan Housing Finance Corp. have since pushed financing costs higher."

Debt concerns have pushed funding costs for non-bank financing companies to multi-year highs in recent weeks. That’s bad news for borrowers in the world’s fastest-growing major economy -- from poor entrepreneurs getting micro loans for food delivery businesses to property tycoons looking to roll over debt that fueled a construction boom. 

The development will make money more expensive for a huge range of enterprises and individuals, at a crucial time for policy makers. Teetering economic activity is already pressuring the central bank to deliver on expectations for a back-to-back interest rate cut in April. And Prime Minister Narendra Modi must avoid economic turbulence ahead of elections next month.

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