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India shadow bank fears linger as Dewan seeks strategic partner

Nonbank lender faces liquidity concerns but denies fraud allegations

A worker cleans the windows of an office building in Mumbai's central financial district.    © Reuters

MUMBAI -- Concerns are rising over another debt crisis in India as Dewan Housing Finance admitted it was seeking a strategic partner to help overcome financial troubles. The company denied fraud allegations on Monday but admitted it needed to raise funds to stem a crisis of confidence.

Dewan, one of India's largest private housing finance companies, is facing allegations that it siphoned off around 310 billion rupees ($4.3 billion). The company has been in trouble since a liquidity crisis broke out at IL&FS, short for Infrastructure Leasing & Financial Services, in September, raising fears of sector-wide collapse. IL&FS has since been taken over by the government.

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