MUMBAI: With the future stability of the Indian financial system on the line, executives running a giant infrastructure lender gathered at the company’s glassy, modernist headquarters in Mumbai and hammered out an ambitious restructuring plan last Saturday to manage a US$12.6bil debt burden after a string of defaults.
Except that they weren’t really calling the shots any more. The very next day, the government in New Delhi authorised a move to sweep in and seize control of Infrastructure Leasing & Financial Services Ltd (IL&FS), a vast conglomerate that’s raised billions of dollars in the corporate bond market and powered the nation’s public project building boom. The stunning move, more typical of China’s command-and-control economy than a free-wheeling democracy like India, caught investors by surprise. Prime Minister Narendra Modi’s government also unveiled an investigation into IL&FS’ management by the Serious Fraud Investigation Office.
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