Indian Shadow Banks’ IPO Boom Falters on Mounting Credit Stress

India’s once-burgeoning pipeline for new stock sales by shadow banks is stalling as strains across the sector prompt lenders to scrap or delay listings.

TPG Inc.-backed SK Finance Ltd. and Belstar Microfinance Ltd. are the latest firms to shelve plans for initial public offerings, according to people familiar with the matter. SK Finance had sought to revive its IPO last month at a smaller size and lower valuation, Bloomberg News reported earlier.

Shadow lenders are losing appeal with investors even though India’s IPO market has rebounded recently. The pulled sales threaten to blemish what could be a record year for ...