The IL&FS Crisis: Decoding India's Lehman Moment
India’s Lehman Moment?
Decoding IL&FS Issue
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Some concepts
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IL&FS
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How it all unfolded
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Impact/The gravity of the crisis
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Way forward
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p
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Commercial Papers
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Inter-corporate deposits
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Shadow Banks
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Credit Rating
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High debt to equity ratio
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The passage of LARR
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Shift in the strategy
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Overdependence on the PPP model
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Unviability of the Infrastructure projects
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Amount under arbitration
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IL&FS borrowed by issuing short term instruments
Defaulted on the repayment to SIDBI and was downgraded
The investors and stock market took a hit
RBI and SBI infused liquidity
Government steps in
New Board for the company appointed
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It
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s a different animal
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Majority of the borrowing is from FIs
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Corporate debt market under pressure
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The total debt of IL&FS is presently pegged at over ₹ 90000 Cr
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High repayment obligation in short term
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Infrastructure investment will be hit
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Borrowing will become costly for the market players
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Contagion effect
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Impact on debt market
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Impact on equity market
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Impact on shadow banking
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Impact on lending and borrowing
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Doubts over infrastructure projects
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Credibility of the rating agencies
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Accountability
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Is it illiquid or insolvent?
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y
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To take care of the present issues
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Bring in new investors by issuing equity
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Sell some of the assets
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Proposal to conduct rights issue
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Enhanced transparency, regulation and accountability of the market
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Regulate the rating agencies
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Economic Offenders
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Investments by LIC
The IL&FS crisis in India unfolds as a significant economic event, impacting various sectors. It involves high debt, strategic shifts, defaults, and government interventions. The gravity of the crisis, concerns about contagion effects, impacts on markets, and doubts over projects raise questions about its liquidity and solvency. The way forward includes measures to address current issues, bring in new investors, enhance transparency, and regulate the market for long-term stability.
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Presentation Transcript
Indias Lehman Moment? Decoding IL&FS Issue
Points to be covered Points to be covered Some concepts IL&FS How it all unfolded Impact/The gravity of the crisis Way forward
Some Concepts Some Concepts Commercial Papers Inter-corporate deposits Shadow Banks Credit Rating
IL&FS IL&FS
What actually happened What actually happened High debt to equity ratio The passage of LARR Shift in the strategy Overdependence on the PPP model Unviability of the Infrastructure projects Amount under arbitration
How it unfolded How it unfolded IL&FS borrowed by issuing short term instruments Defaulted on the repayment to SIDBI and was downgraded The investors and stock market took a hit RBI and SBI infused liquidity Government steps in New Board for the company appointed
The gravity of the crisis The gravity of the crisis It s a different animal Majority of the borrowing is from FIs Corporate debt market under pressure The total debt of IL&FS is presently pegged at over 90000 Cr High repayment obligation in short term Infrastructure investment will be hit Borrowing will become costly for the market players
Concerns/issues Concerns/issues Contagion effect Impact on debt market Impact on equity market Impact on shadow banking Impact on lending and borrowing Doubts over infrastructure projects Credibility of the rating agencies Accountability Is it illiquid or insolvent?
Way Forward Way Forward To take care of the present issues Bring in new investors by issuing equity Sell some of the assets Proposal to conduct rights issue Enhanced transparency, regulation and accountability of the market Regulate the rating agencies Economic Offenders Investments by LIC
