One of India’s largest financial institutions, Infrastructure Lending and Financial Services, which has helped to fuel the growth of the world’s fastest-growing economy over the past 30 years. But now it threatens to, has now helped to bring India to the brink of crisis.
The company is considered systematically important to the health of the economy, since some of its largest stakeholders include the Central Bank of India, the State Bank of India (NSE: SBIN), the largest mortgage lender in India (NSE: HDBFC), and the largest life insurance company in India, which is state-owned.
IL&FS owns or is affiliated with between 170 and 256 smaller companies, depending on the criteria by which they are categorized, and this has made the current crisis difficult to foresee. Its figurehead resigned for health reasons in July, and it began defaulting on its debts in August, the effects of which have taken until mid-September to become apparent.
The BSE SENSEX and the Nifty 50 (NSE: NIFTY) indices have plunged from highs in August, and many brows have been knitted in anticipation of a solution. The IL&FS crisis is only the icing on the cake, really, in the broader context of a nationwide pandemic of bad debt that has caused Reserve Bank of India to force corrective framework on 11 of the 21 government-owned banks in recent months, as well as a falling Rupee (INR:USD).