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MUMBAI : As the threat of default looms over China’s second-largest real estate developer, Evergrande, veteran banker Uday Kotak on Tuesday referred to it as the nation’s Lehman moment.

In 2008, when Lehman Brothers declared bankruptcy following the sub-prime mortgage crisis in the US, shockwaves were felt worldwide. Now, parallels are being drawn between the Lehman bankruptcy and an impending default by Evergrande.

“Evergrande seems like China’s Lehman moment. Reminds us of IL&FS. Indian government acted swiftly, provided calm to financial markets. The government-appointed board estimates 61% recovery at IL&FS. Evergrande bonds in China trading ~ 25 cents to a dollar," tweeted Kotak, MD and CEO of private sector lender Kotak Mahindra Bank.

According to a BBC report on Tuesday, the world’s most indebted real estate developer is due to make interest payments of $84 million on its bonds on Thursday.

However, earlier this week, the company started to repay investors in its wealth management business with the property as it struggled to find the cash to meet its liabilities.

The Infrastructure Leasing and Financial Services (IL&FS) collapse in September 2018 had sparked a liquidity crunch that severely affected non-bank lenders. Following the default, Kotak was asked by the government to head the lender’s board in 2018 to complete the debt resolution of the troubled company and its group companies with a debt burden of 90,000 crore.

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