IL&FS shareholders include financial institution like SBI and LIC, and so these big institutions might face problem with IL&FS crisis. As LIC and SBI is the biggest and most trusted institution in India, it losses might affect people of the country. Additionally, IL&FS raise fund from various corporates, mutual funds, and insurance companies by issuing CPs and NCDs, so they too might face a liquidity crunch if IL&FS default in repayment. This will further lead to a sever liquidity crunch in the economy as most of the money will be locked with IL&FS group.

Big institutions like IL&FS defualting further creates an enviornment of un-trust on potential investors to invest in debt instruments of other HFCs and NBFCs. It accounts to 16 percent of the banking sector's exposure. Also, currency and rising crude oil prices might fuel the panic situation.