India’s Shadow-Bank Bust Has a Lehman Echo
Banks and mutual funds are on the hook for IL&FS’s $12.5 billion debt.
A front loader moves non-segregated waste at the IL&FS compost plant in Mysuru, Karnataka, India. The reach of IL&FS, and its looming cash crunch, hold reminders of the 2008 financial crisis.
Photographer: Samyukta Lakshmi/Bloomberg
India is marking the 10th anniversary of the 2008 global financial crisis with its own mini-Lehman moment.
True to script, rating companies have belatedly realized that the IL&FS Group — Infrastructure Leasing & Financial Services Ltd. and its associates — is woefully short of liquidity. For instance, IL&FS Financial Services Ltd. has about $500 million in repayments coming due in the second half of its fiscal year through March; it has only about $27 million available. The group, which missed a payment in the commercial-paper market last month, is now late in servicing an inter-corporate deposit.