House panel to find out why infra giant IL&FS collapsed

THE HOUSE PANEL’S REVIEW WILL CONTINUE WHILE THE NDA GOVERNMENT HAS ORDERED A PROBE BY THE SFIO INTO SOME OF THE GROUP ENTITIES

: Parliament’s standing committee on finance will review the IL&FS case that triggered widespread panic in the Indian stock markets after it defaulted on payments.

The infrastructure lending giant had accumulated a whopping $12.6 billion debt burden after a string of defaults, prompting the Centre to move quickly, amid a rapid fall in the sector’s stock prices, to take control of Infrastructure Leasing & Financial Services Ltd. (IL&FS).

The country’s biggest public sector bank, SBI, also decided to buy ~45,000 crore of stressed assets of the faltering company, pumping in the much-needed cash in IL&FS. “We want to assess the crisis and do our own review because IL&FS is one of the key lenders in the infrastructure sector,” panel chairman Veerappa Moily told HT on Friday, clarifying the need for such a review by a House panel.

“We need to find out the reasons for its collapse as it has a far-reaching effect on the economy,” said Moily.

The committee has called SEBI chief Ajay Tyagi and other senior officials of the market regulator on October 23.

“We will also go to Mumbai in November. Meanwhile, we have also decided to call RBI governor Urjit Patel to brief us on this issue in Delhi,” Moily added.

A senior member of the panel that deals with all issues related to the economy added that the panel will also try to fix accountability and suggest ways to prevent such a disaster in future. The finance standing committee had earlier scrutinised important economic and financial bills, alleged scams in IPL and issues related to the GST and demonetisation.

While a panel’s recommendations are not binding upon the government, its report is always considered seriously by stakeholders. The panel can also seek an action taken report from the government on its recommendations to follow up on its original report.

The House panel’s review will continue while the NDA government has ordered a probe by the SFIO (Serious Fraud Investigation Office) into some of the group entities, amid allegations of fund diversion and mismanagement.