Mumbai — India’s banks are freezing credit lines to shadow lenders as the coronavirus crisis shuts down commerce in Asia’s third-largest economy, but leaving this sector in the lurch risks wider financial contagion.

All major state-owned and private banks have stopped lending to non-banking financial companies (NBFCs) due to concerns about their financial health as businesses they lend to reel from the effect of the Covid-19 pandemic, four industry executives, who asked not to be named due to the sensitivity of the situation, said...

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