Banking
NBFC Crisis
Also known as: Shadow Banking Crisis, IL&FS Crisis
2018 liquidity crisis in Non-Banking Financial Companies following IL&FS defaults.
Detailed Explanation
The NBFC (Non-Banking Financial Company) crisis of 2018 began with IL&FS defaults in September 2018, triggering a liquidity crunch across the shadow banking sector. NBFCs found it difficult to roll over short-term funding, leading to credit tightening, reduced lending, and significant stress in financial markets. This crisis highlighted interconnectedness risks and led to regulatory reforms in the NBFC sector.