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Few think that a liquidity crisis is the firm's only problem. Even when its credit was good, its projects had a nasty habit of busting their budgets.
Some, such as GIFT City, a pet project of Narendra Modi, the prime minister, in Gujarat, look like white elephants.
More than half of IL&FS's receivables are tied up in claims about delays, termination payments and the like.
The government has accused the management of being "well aware of the precarious and critical financial position",
but continuing to present "a hunky-dory scenario which was just a mirage". India's Serious Fraud Investigations Office is investigating.
Bureaucrats in the Reserve Bank of India, the central bank, will be unsettled by the risks that lie outside the banking system, and not just within it.
Bad debt in the regulated and largely publicly owned banking sector is rising.
Last year the government had to recapitalise state-owned banks to the tune of 2.1trn rupees. Shadow banks offer a new festering mess.
In recent years they have provided more credit to the commercial sector than banks have.
Either India's fast-growing mutual funds and insurers, which own much of IL&FS's debt, have been judging risk inaccurately,
or they know full well what they have been doing but expect the government to step in.
A cash infusion will win IL&FS and the government a few months.
That will allow the revamped board to appoint new management, assess losses and start selling assets to pay down debt.
The government may seek to clear obstacles in the way of those of its projects that could be made profitable.
Meanwhile, markets are nervous. Shares in other non-bank lenders have collapsed. Which will be next to look for the government to cushion its fall?