Infrastructure Leasing and Financial Services is a shadow bank and it acts as a Non-Banking Financial Company, Since it does not have public dealings directly, it always escapes from the regulatory oversights.

Formed  in 1987 as  “RBI registered Core Investment Company”, currently its institutional shareholders include LIC, SBI, ORIX, Abu Dhabi Investment Authority, and some small holders.


IL&FS defaulted on certain payments and failed to serve its commercial papers on due date, which implies that the company is facing a liquidity crunch. IL&FS owed 57,000 Crore INR of debt to public sector banks and housing finance companies.

IL&FS shocked markets when it postponed a $350 Million bonds issuance in March due to demand for higher yield from investors and by the middle of September. IL&FS owes $500 Million in repayments and has a combined 270 Billion INR in debt.


SFIO started a probe as there were huge procedural lapses at the NBFC. On April 2, 2019 Hari Sankaran,, the former vice-chairman of IL&FS, was arrested by SFIO in Mumbai for granting loans to entities that were not creditworthy and thereby causing loss to the company and its creditors.

On August 16, 2019, the Enforcement Directorate (ED) filed its first chargesheet in the  IL&FS money laundering case. Prosecution complaint was filed in a special court of the Prevention of Money Laundering Act charging former senior management personnel of IL&FS – Ravi Parthasarathy, Ramesh Bawa, Hari Sankaran, Arun Saha, and Ramchand Karunkaran.

Enforcement Directorate also made provisional attachment of bank accounts and immovable property to the tune of Rs 570 crore held by these people.


Default by IL&FS led to panic in the debt market and dried liquidity in the system. The liquidity shortage of 100000 Crore INR in the system intensified the fear that funding cost for NBFCs will zoom and result in a sharp deterioration of their margins.


Along with probing questions at the inefficient corporate governance of NBFCs, the liquidity crisis also points out the faults in the role of public regulatory bodies.

Causing a gigantic loss to the economy, if the liquidity crisis prolongs, the consumption will go down further weakening the growth. The need is to restore investors’ confidences that are worried about leverage at other shadow banks, prompting a surge in volatility among financial stocks.

--- Pratha Sachdeva

(MCM DAV college for women)

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