Gearing

Borrowings divided by equity, the standard leverage measure for a non-bank lender.

A lender with ₹18,000 crore of borrowings and ₹4,000 crore of equity is geared 4.5 times, which sits inside the ordinary Indian range of three to six.

Above seven or eight times the model becomes fragile, because a small loss on the asset side consumes a large share of the equity and the wholesale funding that supports the book reprices at exactly the same moment.

Gearing plus a funding mismatch is the combination that has ended Indian non-bank lenders.