The Indian Debt Default That Has People Worried: QuickTake

One of India’s key shadow banks is in trouble. IL&FS Group, a vast conglomerate that funds infrastructure projects across the world’s fastest-growing major economy, sent shock waves through credit markets when it began missing debt repayments. That’s caused concern not just for its myriad investors, including private individuals, who had regarded IL&FS debt as rock-solid. There’s also anguish that the group’s troubles may spread to other shadow banks and crimp Prime Minister Narendra Modi’s infrastructure plans.

More than 30 years old, Infrastructure Leasing & Financial Services Ltd. says on its website that it has helped develop and finance projects worth 1.8 trillion rupees ($25 billion). Marquee developments included the Chenani-Nashri tunnel -- India’s longest road tunnel at 9 kilometers (5.6 miles). The company describes itself as the pioneer of public private partnerships, with a portfolio of about 13,100 kilometers of roads. Shareholders include India’s largest insurer, Life Insurance Corp.; its biggest lender, State Bank of India; and Japan’s Orix Corp. Its 169 subsidiaries, associates and joint ventures, critics say, make it too complex for any watchdog or credit-rating firm.