Letter to BS: Time for govt to create a sound institutional model for IL&FS

The government’s takeover of the management and appointment of a new board of directors for Infrastructure Leasing & Financial Services (IL&FS) is timely and may hopefully halt further damage. The crisis did not raise its head all of a sudden — it has been brewing over a few years. It could have been avoided had the board, the senior management, the auditors, the rating agency and the regulatory authorities played their roles diligently. The IL&FS group as a whole has a consolidated debt of little over Rs900 billion. The Centre should also have a look at the clearances and payments by IL&FS agencies for infrastructure projects and tone up wherever necessary. This is a systemic and governance failure and also implies a lack of regulatory oversight. It is an appropriate time for the government to focus on creating a sound institutional model for infrastructure financing as it is key to the country’s economic development. 

P B Srinivasan via email

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