{"id":381792,"date":"2018-10-20T20:21:00","date_gmt":"2018-10-20T19:21:00","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/newswire\/india-seizes-shadow-bank-to-avert-potential-catastrophic-impact-on-financial-system\/"},"modified":"2018-10-20T20:21:00","modified_gmt":"2018-10-20T19:21:00","slug":"india-seizes-shadow-bank-to-avert-potential-catastrophic-impact-on-financial-system","status":"publish","type":"post","link":"https:\/\/rinf.com\/alt-news\/newswire\/india-seizes-shadow-bank-to-avert-potential-catastrophic-impact-on-financial-system\/","title":{"rendered":"India seizes \u201cshadow bank\u201d to avert potential \u201ccatastrophic\u201d impact on financial system"},"content":{"rendered":"<div id=\"content\">\n<h3 class=\"nomargin\">\u00a0<\/h3>\n<h2>India seizes \u201cshadow bank\u201d to avert potential \u201ccatastrophic\u201d impact on financial system<\/h2>\n<h5>\n<p>    By<br \/>\n    Kranti Kumara<br \/>\n    <br \/>20 October 2018<\/p>\n<\/h5>\n<p>Earlier this month, India\u2019s BJP government seized control of a little-known company, Infrastructure Leasing and Financial Services (IL&amp;FS), saying the \u201cshadow bank\u2019s\u201d collapse could potentially inflict \u201ccatastrophic\u201d damage on India\u2019s \u201cfinancial stability.\u201d<\/p>\n<p>In explaining the government\u2019s sudden intervention, financial observers have said the collapse of IL&amp;FS, the country\u2019s largest non-bank lender, could have been India\u2019s \u201cLehman Brothers moment\u201d\u2014a reference to the September 2008 bankruptcy that triggered the global financial meltdown.<\/p>\n<p>IL&amp;FS had a triple-A credit rating as recently as August, but defaulted on a series of payments last month including a Rs 4.5 billion ($41 million) short-term loan from the state-owned Small Industries Development Bank of India. Subsequently, the government learned IL&amp;FS has to repay a massive Rs 37 billion ($500 million) over the next 6 months, but currently has just Rs. 2 billion ($27 million) in cash reserves.<\/p>\n<p>Moreover, the company is also carrying a huge debt-load of Rs 911 billion ($12.5 billion), 63 percent, or Rs 574 billion ($7.9 billion) of which is owed to banks.<\/p>\n<p>India\u2019s banks are themselves mired in crisis. Indeed, in recent years there has been a rapid expansion of lending through shadow banks such as IL&amp;FS, because the country\u2019s banks, themselves burdened by loans that have gone bad, have become chary in extending credit. India\u2019s state-owned banks have a gargantuan Rs 13 trillion ($178 billion) in delinquent loans. At least $70 billion of these are \u201cNon-Performing Assets\u201d (NPAs), i.e., loans on which the banks have received no payment from borrowers for 90 days&#8230;<\/p>\n<\/div>\n<p><a href=\"http:\/\/www.wsws.org\/en\/articles\/2018\/10\/20\/ilfs-o20.html\">Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0 India seizes \u201cshadow bank\u201d to avert potential \u201ccatastrophic\u201d impact on financial system By Kranti Kumara 20 October 2018 Earlier this month, India\u2019s BJP government seized control of a little-known company, Infrastructure Leasing and Financial Services (IL&amp;FS), saying the \u201cshadow bank\u2019s\u201d collapse could potentially inflict \u201ccatastrophic\u201d damage on India\u2019s \u201cfinancial stability.\u201d In explaining the government\u2019s [&hellip;]<\/p>\n","protected":false},"author":2526,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[519],"tags":[],"class_list":{"0":"post-381792","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-newswire"},"_links":{"self":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/381792","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/2526"}],"replies":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=381792"}],"version-history":[{"count":0,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/381792\/revisions"}],"wp:attachment":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=381792"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=381792"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=381792"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}