In June 2018, Investment Leasing & Financial Services Ltd (IL&FS), a prominent Indian conglomerate specialising in infrastructure financing, began defaulting on the repayment of short-term commercial paper and inter-corporate deposits amounting to Rs 450 crores ($54 million). This initial default set off a domino effect in the financial sector, exposing systemic vulnerabilities within the market.
In the following years, a web of interconnections led to a series of market collapses among private sector entities. One of the most notable instances was the crisis at YES Bank, which had rapidly emerged as one of India’s fastest-growing private banks.
YES Bank faced a significant financial burden stemming from poor asset quality and governance lapses. The bank had invested Rs 4733 crores ($566.8 million) in Dewan Housing Finance Ltd (DHFL), a leading non-banking financial company (NBFC) in the housing finance sector. Allegations arose that these investments were made in exchange for kickbacks.
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