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Economy

India's shadow bank woes rattle broader economy

Auto industry skids as cash-strapped lenders pull back from car financing

New-auto sales in India fell 17% for the April-June quarter. Industry officials say the decline stems in large part from nonbank lenders' struggles.  (Photo by Takaki Kashiwabara) 

MUMBAI -- The credit crunch in India's shadow banking sector, or nonbank lenders, has begun to squeeze the economy, with a crucial auto sector shedding jobs as reduced consumer access to loans dents sales.

After a strong first half of 2018, new-auto sales in India began declining on the year in November and tumbled 17% for the April-June quarter. Sales of passenger vehicles sank 31% in July, marking the ninth straight month of declines, according to the Society of Indian Automobile Manufacturers.

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