(Bloomberg) -- Facing a record amount of debt that’s about to mature, India’s non-bank financing companies are finding their troubles worsening as a crisis of credibility starts to bite.

The shadow lenders, which have been under increased strain after the collapse of IL&FS Group last year, have a record 1.1 trillion rupees ($15.8 billion) of local-currency bonds due next quarter, according to data compiled by Bloomberg. Refinancing the obligations poses a challenge as investor concerns flare amid mounting problems such as auditors quitting, repayment problems and allegations of embezzlement.

“The refinancing risk is becoming bigger for those NBFCs with a larger quantum of repayments coming due,” said Rajat Bahl, chief analytical officer at Brickwork Ratings in Mumbai. “The only options for them are the selldown of loan portfolios, securitization and zero-to-no growth in new loan disbursements.”

A financing crunch may hurt India’s economic growth that the non-bank financing companies have helped underpin by providing financing for smaller businesses including restaurant owners, rickshaw drivers and merchants. Such lending, which traditional banks may have avoided, has essentially run on leverage -- the shadow lenders get money from banks or by issuing bonds, and use that for other types of financing.

Shadow Banking Crisis Raises Risk of Indian Bad-Loan Redux

India’s NBFCs also have more than one trillion rupees of bonds to refinance in both the first and second quarters of 2020, the data show. Maturities will climb to about 3.9 trillion rupees in 2020, an all-time high.

Lenders led by Dewan Housing Finance Ltd. and tycoon Anil Ambani-controlled Reliance Capital Ltd. are seeking to accelerate asset sales including subsidiaries to meet rising debt commitments. The resignation of one of Reliance Capital’s auditors, delayed payments by Dewan this month and allegations against Indiabulls Housing Finance Ltd. are hurting an already rough credit environment.

“The larger NBFCs are going to banks for fundraising and crowding out the smaller ones, which have very limited choices to raise money,” Brickwork’s Bahl said.

To contact the reporter on this story: Anurag Joshi in Mumbai at ajoshi53@bloomberg.net

To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Beth Thomas

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