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The race to find a rescuer for a struggling Indian shadow bank at the center of an industry crisis has narrowed.

Altico Capital India Ltd. is one of the latest caught up in the nation’s shadow banking crisis that started in 2018, and had been courting suitors. One of them, Kotak Investment Advisors Ltd., won’t make a binding bid for Altico by a Jan. 15 deadline, people familiar with the matter said.

In India, non-bank financiers play a crucial role in funding everything from condominium construction to purchases of personal goods like cars and phones. Real-estate focused Altico’s restructuring and sale process comes as the broader shadow-bank crisis drags on, hurting the property sector and the economy.

The non-bank lender’s troubles have been piling up since it started defaulting in September. Cerberus Capital Management LP and SSG Capital Management are now the only remaining external bidders, highlighting dwindling interest in Mumbai-based Altico which is grappling with soaring bad loans.

Kotak halted work on a binding bid for Altico after getting adverse feedback from creditors, the people said, asking not to be identified because the information is private. Mumbai-based Kotak’s indicative offer hinged on a purchase of either part or all of Altico’s loan portfolio, one of the people said. A low cash infusion and a high fee structure caused the pushback, the second person said.

A Kotak spokesman didn’t respond to a request for comment, while an Altico spokesman declined to comment.

Cerberus Capital and SSG Capital are now competing with an Altico shareholder-sponsored group to take over the shadow lender after two other firms pulled out. Creditors will meet Wednesday to discuss how the winning bidder will be decided, one of the people said.

A SSG Capital spokesman declined to comment, while Cerberus didn’t immediately reply to an email sent outside of U.S. office hours seeking comment.

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