Leadership, Governance, and Systemic Risk: The IL&FS Crisis through the Lens of Ravi Parthasarathy

This teaching case investigates the emergence and subsequent downfall of Infrastructure Leasing & Financial Services (IL&FS), a prominent infrastructure finance institution in India, through the lens of the leadership and decision-making framework employed by its long-serving Chairman, Ravi Parthasarathy. Over the span of three decades, Parthasarathy transformed IL&FS into a hybrid conglomerate that encompassed both public infrastructure development and private financial intermediation. However, by 2018, the organization’s intricate network of over 200 subsidiaries, excessive leverage, asset–liability mismatches, and non-transparent financing practices triggered a liquidity crisis that resounded throughout India’s financial system. This case situates IL&FS within the broader discourse on shadow banking, institutional design, corporate governance, and systemic risk, demonstrating how strategic decisions made during periods of expansion can entrench long-term vulnerabilities. Students are invited to critically assess leadership behaviors, failures in board oversight, complacency among rating agencies, and regulatory oversights that facilitated the accrual of concealed risks. Furthermore, the case examines the unprecedented governmental intervention, which included superseding the board, establishing an independent restructuring committee, and implementing a multi-year resolution framework. By engaging with empirical data, narrative intricacies, and the competing interests of stakeholders, learners will acquire a nuanced understanding of (a) governance challenges in hybrid public–private institutions, (b) crisis leadership in conditions of uncertainty, and (c) ethical dilemmas concerning disclosure and accountability. This case is tailored for postgraduate, executive, and doctoral-level courses in corporate governance, finance, public policy, and leadership.