The Life Insurance Corporation (LIC), the largest shareholder in debt-ridden IL&FS, on Tuesday said it would not allow the infrastructure lending firm to collapse and would explore all options to revive it, including increasing its stake.

“We will ensure IL&FS does not collapse. We will not allow contagion to spread from IL&FS... All options are open (including raising stake in the company),” LIC chairman V.K. Sharma said after a meeting in the finance ministry.

The meeting was held in the backdrop of the IL&FS group defaulting on a short-term loan of Rs 1,000 crore from the Small Industries Development Bank of India (Sidbi). This was the third default by the company.

State-owned LIC is the largest shareholder with a fourth of the firm’s equity, while Orix Corporation of Japan owns 23.5 per cent.

Other shareholders include Abu Dhabi Investment Authority (12.5 per cent), IL&FS Employees Welfare Trust (12 per cent), HDFC (9.02 per cent), Central Bank of India (7.67 per cent) and the State Bank of India (6.42 per cent).

IL&FS has been facing liquidity issues for some time now. Apart from the Sidbi default, on September 14 it tripped on the repayment of commercial paper worth Rs 105 crore. The very next day it had defaulted on Rs 80-crore of inter-corporate deposits (ICDs).

We will ensure IL&FS does not collapse. We will not allow contagion to spread from IL&FS... All options are open (including raising stake in the company)

V.K. Sharma, LIC chairman

Since August, it has defaulted on around Rs 450 crore of ICDs to Sidbi.

Earlier this month, IL&FS and its subsidiary, IL&FS Financial Services, also delayed payments on ICDs and commercial papers, instruments that mature in less than a year. Additionally, IL&FS Financial Services has about $500 million in repayments, which are due in the second half of this financial year, while it has only about $27 million available.

The RBI will meet the shareholders of IL&FS on Friday as the group continues to default on its debt obligations.

The meeting will focus on the defaults reported by IL&FS and its arms. Also on the agenda is a discussion on a capital infusion plan that the shareholders will take up on Saturday at the annual general meeting of the company.