Saving the 'Titanic': Govt says took over IL&FS to stop catastrophic damage

The rescue was critical for PM Modi, who can ill afford a financial crisis months before he faces voters at the next election

The Indian government said it was forced to take control of ailing shadow banking firm Infrastructure Leasing & Financial Services (IL&FS) as it feared its collapse would cause "catastrophic" damage to the financial markets and the economy, a court filing shows.    

In the largest intervention of its kind, India this week replaced the board at IL&FS, a construction and infrastructure firm that had defaulted on a series of repayments to creditors as it struggled under a debt pile of more than $12 billion.

The company's downfall has undermined confidence in India's shadow banking sector, triggered declines in the nation's stock