IL&FS liquidity crisis credit negative for banks, debt market: Moody's

As of 31 March 2018, debts incurred by ILFS in the form of bank loans accounted for around 0.5 per cent - 0.7 per cent of overall banking system loans

Sounding a warning on liquidity crisis at IL&FS group, global rating agency Moody's on Wednesday said it is credit negative for banks and debt market in India. The defaults would impact mutual funds, pension funds and insurance companies. 

One particular asset challenge for banks in a potential ILFS default comes from the Company's complex corporate structure. This could result in high variation of ultimate losses across banks depending on where the banks' specific exposures lie, Moody's said in a statement.

Now the group flagship — IL&FS, and key group entities carry either default "D" grade or sub-investment grade rating.

ILFS