Corporate governance crisis at infrastructure leasing and financial services ltd

Abstract

A stark example of corporate governance failure can be attributed to IL&FS crisis in India’s financial sector. This collapse took place due to misuse of power, lack of transparency and weak internal controls. The company’s board of directors and senior executives engaged in evergreening of loans, round-tripping, and misused the RPTs. Other than these executives, auditors and credit rating agencies overlooked major red flags, adding to the corporate governance failure totalling up to 91,000 crores in default. This further led to loss of investor confidence. The root cause of this failure was not only on the part of senior executives but a major factor was the intention behind conducting the fraud and misled the shareholders.