The IL&FS Fiasco and the Lessons Learnt

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Published: 2020-07-31

Page: 140-153

Anant Kothari *

Department of Commerce, St. Xavier’s College (Autonomous), Kolkata, India.

Anindita Ghosh

Department of Commerce, St. Xavier’s College (Autonomous), Kolkata, India.

*Author to whom correspondence should be addressed.


The analysis of this paper revolves around the Infrastructure Leasing & Financial Services (IL&FS), established in 1987 as an “RBI-registered Core Investment Company”. IL&FS falls under the category of ‘shadow bank’ - this term was first advocated by Paul McCulley at the Annual Meeting of FED in 2007. It is notable that in the absence of regulatory oversight, such a system acts as a consortium of intermediaries to facilitate the creation of credit across the global financial system.

The entity under review operates in multifaceted sectors like real estate, energy, transportation, and financial services. Its operations are conducted through directly as well as indirectly controlled subsidiaries, associates, and joint venture entities.

Though financial scandals and frauds are in no way new to India, it is disheartening to note a considerable rise of such instances in recent times. The IL&FS crisis came in the wake of the Punjab National Bank scam, estimated at a value of Rs. 13,600 crores. If the Satyam fraud can be considered as the Indian Enron, then the IL&FS may be dubbed as the becoming of India’s own ‘Lehman Brothers’.

Keywords: Financial crisis, shadow banking, governance, credit rating.

How to Cite

Kothari, A., & Ghosh, A. (2020). The IL&FS Fiasco and the Lessons Learnt. Asian Journal of Economics, Finance and Management, 2(1), 140–153. Retrieved from


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