Calling the IL&FS crisis “India's Lehman Brothers moment”, the Congress on Wednesday, September 26, sought a Supreme Court monitored multi-agency probe saying the irregularities in it has brought India on the verge of economic collapse.
Congress spokesperson Manish Tewari said the IL&FS Group, an infrastructure development and finance company, has a total debt of ₹91,000 crore as on March 31, 2018 and was in no position to pay back its dues and had started defaulting.
"This is such a serious matter that a multi-agency investigation needs to be carried out under the Supreme Court's monitoring," Tewari said and questioned how a company with 40 per cent stake of government institutions was allowed to pile up ₹91,000 crore debt.
The equity structure of IL&FS Ltd includes LIC's 25.34%, Central Bank of India's 7.67 % and State Bank of India's 6.42%. Besides, Orix Corp of Japan owns 23.5% and Abu Dhabi Investment Authority owns 12.5%.
Tewari said a high-level probe was needed to ascertain how central government employees nominated by LIC, CBI and SBI in the IL&FS Board could allow the group's debt to rise 44% in the last three years to a debt to a net worth ratio of 16.78 to one.
Congress leader Manish Tewari said the IL&FS crisis was worth seven times more than the combined economic offence of Vijay Mallya, Nirav Modi and Mehul Choksi
Tewari said the IL&FS crisis was seven times more than the combined economic offence of Vijay Mallya, Nirav Modi and Mehul Choksi. He said the unlisted company has a very opaque corporate structure and rating agencies have classified its equity as junk.
"IL&FS is on the verge of collapse and if that were to happen it will have a domino effect like after Lehman Brothers one after the other financial institutions started tumbling. Already on Monday and Tuesday, the markets have been yo-yoing because of this," he said.
The Congress leader attacked the Modi government saying the Prime Minister's Office and the Finance Ministry were putting pressure on Reserve Bank of India (RBI), SBI, LIC and National Highway Authority of India (NHAI) to bail out the company.
While the government has maintained that as IL&FS is a private company it will not intervene, the biggest shareholder LIC has recently said it will not let IL&FS collapse and was open to all options including raising stake in the company.