Mumbai: A health check on India’s shadow banks shows the crisis in the industry is far from over.

Indicators from liquidity to share performance show weakness, according to data compiled by Bloomberg as of September 30. In recent weeks, another financier defaulted, it got harder for investors to cut losses in the sector’s debt and a mortgage lender altered financing plans due to waning appetite for shadow bank bonds.

Banking system liquidity stayed lower last month, the premium that investors demand to hold shadow lender bonds over sovereign notes remained elevated and a custom gauge of shares of 20 financial firms and other companies impacted by the crisis was stagnant. One silver lining: difficulty accessing the bond market has prompted total outstanding debt at 50 such borrowers to hold at lower levels than earlier this year.

“The non-bank crisis is having a contagious effect, and if not tackled in time, the situation looks scary,” said Ajay Manglunia, managing director and head of institutional fixed income at JM Financial Products Ltd. “That’s because these financiers have a reach across the smallest to the largest borrower in the country.”

A resolution to the crisis that’s over a year old is imperative to revive India’s flagging economy. Non-bank firms fund everyone from poor entrepreneurs to business titans looking to roll over debt. Altico Capital India Ltd, a realty financier, last month became the latest to default, while Punjab & Maharashtra Co-operative Bank Ltd duped regulators and extended outsize loans to an insolvent developer.

Troubles began last year when major shadow bank IL&FS Group unexpectedly defaulted, prompting broader shock that made it hard for many companies to refinance debt. The fallout persists: this month the Reserve Bank of India slashed its economic growth projection to 6.1% from 6.9%, the biggest cut in at least five years.

Some see benefits ahead from policy measures. Lenders including IndusInd Bank Ltd, Axis Bank Ltd and Edelweiss Financial Services Ltd say the financial sector woes will ease soon, after the government slashed the corporate tax rate to one of the lowest in Asia and the central bank reduced interest rates again.

The scores attached to each of the indicators have been calculated by Bloomberg by normalising the deviation of the latest value of the indicator from its yearly average and have been assigned on a scale of 1 to 7, with 1 implying weakness and 7 showing strength.