Across the board

Foreign institutional investors (FIIs) have been worried about the rising debt levels of India’s large business groups for some time. But their latest concerns focus on the presence of the chief of a major infrastructure group on the board of the Reserve Bank of India (RBI), which regulates the banking sector. He was inducted last September for a four-year period. On the face of it, there is nothing unusual in this since chiefs of other corporate groups also serve on RBI’s board, Azim Premji and Kumar Mangalam Birla among them. But FIIs have recently raised the issue of a conflict of interest because the group has a debt of approximately Rs 30,000 crore and an interest coverage ratio of 0.6, which means that the group’s earnings are not sufficient to service its debt. True, the group is not looking at restructuring its debt so these questions are being raised pending its reported asset sales.