Abstract
The liquidity scare and credit crunch in the economy triggered in early September 2018 when the saga of serial credit defaults was marked by Infrastructure Leasing and Financial Services Ltd., one of the biggest group of companies in India, engaged with the infrastructure financing and development in the country. In repercussion, financial markets went into panic where stock markets shed heavily, investors lost millions and various institutional investors like banks, mutual funds, pension funds and insurance companies, etc. faced severe liquidity crisis. Carrying huge debt of 20 billion USD in its balance sheet with severe shortage of liquidity and dried-up sources of refinancing, more defaults were most likely in pipeline. The IL&FS is the classic case of crony capitalism, collusion and fraud, and failure of corporate governance. The case draws important lessons for strengthening regulatory environment in the country.
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