A Parliamentary panel has recommended to the government that a commission of enquiry should look into the failure of IL&FS and the role of the credit rating agencies (CRAs) in it.

The standing committee on finance led by Congress party leader Veerappa Moily said in its report tabled in Parliament on Wednesday that the enquiry should be comprehensive and cover the role of major stakeholders.

This, the panel said, should include, “the role of CRAs that had over-rated the entities sometime before the crisis and the role of the largest institutional stakeholder in IL&FS, namely the LIC of India as well as other institutional stakeholders.".

The government appointed board is now exploring sale of certain assets to pay off debt. IL&FS has assets across highways, toll bridges, power projects and transmission networks, and holds them through various special purpose vehicles.

The House panel said the governance failures and indecision or indiscretion on the part of the IL&FS board should be thoroughly probed. "The Committee desire that urgent measures should be initiated to resurrect IL&FS, as it is the only major institution funding the infrastructure projects in the country," it said.

The committee suggested to the Finance Ministry and capital market regulator the Securities and Exchange Board of India to explore mandatory rotation of rating agencies like the rotation of statutory auditors to prevent the company management and rating agencies getting into a cozy relationship.

This may help in eliminating complacency in the credit rating industry, the panel noted. The Ministry may also evaluate compulsorily rating by more than one agency, particularly in the case of debt instruments/bank credit involving large amounts say, more than 100 crore, said the House panel. 

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