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The Reserve Bank of India (RBI), hiding behind its role as India’s monetary authority, has escaped all external scrutiny and accountability regarding its second role as regulator of banking and finance companies which is marked by repeated failures. Until a few years ago, these failures were largely hidden by force-merging failed institutions with public sector banks (PSBs). This trick is no longer possible with non-performing loans of banks soaring past Rs 10 lakh crore and the collapse of several ‘systemically important’ shadow banks exposing the high cost of failed supervision.
Maverick politician and economist Dr Subramanian Swamy has filed a public interest litigation (PIL) in the Supreme Court, seeking a probe by central bureau of investigation (CBI) into the ‘illegal acts of RBI officials’, leading to various scams. The petition lists 10 big scams and says, “not a single RBI official has been brought to justice despite RBI retaining the power to monitor,
WHAT IS IL&FS CRISIS IL&FS Crisis Infrastructure Leasing & Financial Services (IL&FS) is a non-banking financial company (NBFC), or shadow bank . Established over 30 years ago, the conglomerate funds infrastructure projects across India. Some of the projects it has helped develop are 9-km Chenani-Nashri tunnel (India’s longest road tunnel), Delhi-Noida Toll Bridge, Ranchi-Patratu Dam Road, Baleshwar-Kharagpur Expressway, Tripura Power Project, and Gujarat International Finance Tech-City (GIFT). Among IL&FS shareholders are LIC, SBI, Japan s Orix Corporation, HDFC and CBI. The subsidiaries of IL&FS include transportation network subsidiary IL&FS Transportation Networks Ltd (ITNL), engineering and procurement company IL&FS Engineering and Construction Co Ltd and financier IL&FS Financial Services Ltd.
Banking on Projects
-TAMAL BANDYOPADHYAY
If the rise of Infrastructure Leasing & Financial Services (IL&FS) defied all logic and the creation of this ‘business model’ broke all sorts of laws and regulations, there was a lot of mystery shrouding its fall as well. On July 24, 2018, Ravi Parthasarathy, chairman and managing director of IL&FS, who had run the group with the authority and flamboyance of a promoter, stepped down like a professional manager, citing ill health.
A last ditch attempt was made to raise funds that could have alleviated the liquidity crisis. This was through a rights issue. It is an even bigger mystery how and why this rights issue was aborted. The rights issue was approved at the company’s AGM on 29 September 2018.… Hari Sankaran, the vice-chairman and managing director of IL&FS, unveiled a three-pronged strategy at its AGM.… And, yet, the rights issue was aborted.… Who pulled the plug on the issue? And why? Had it gone through, IL&FS could have c
When Truth Is Stranger than Fiction, Rumours Are Easily Believed
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On 14th December, a hitherto unknown website, called scamsbreaking .com, stirred up a social media storm with stunning allegations about the Kolkata-headquartered SREI group that has a large footprint in infrastructure and finance. The allegation that made people sit up was that Axis Bank (mainly) had lent a stunning Rs44,000 crore to the group without adequate due diligence.
The report made waves because the SREI group is already under scrutiny with the Reserve Bank of India (RBI) having ordered a special forensic audit of SREI Infrastructure Finance and its subsidiary SREI Equipment Finance on 22nd November.