Recently, India 's leading infrastructure finance company IL&FS triggered panic by defaulting on payments to lenders. The defaults jeopardised a large number of investors, banks and mutual funds associated with the company. The defaults sparked panic among equity investors even as several non-banking financial companies faced turmoil.To make sure sudden defaults don't occur at big companies, the government will use artificial intelligence to sniff out risky companies. It is setting up an algorithm-based platform to alert regulators about companies which are perceived to be risky due to weak and stressed finances or have seen the exit of directors as well as auditors, TOI has reported based on information from sources in the government.The Ministry of Corporate Affairs is developing the Central Scrutiny Centre that will scan filings of all companies and raise red flags. The shortlisted entities will then be taken up for further scrutiny by the Registrar of Companies and may also be referred to other regulating agencies. The e-governance cell will build this algorithm in the next few months. Some filing requirements are also expected to be tweaked to enable better use of data that is already available with the Registrar of Companies.A large part of the identification will be based on financial parameters. For example, to identify possible shell companies, the government will keep tabs on companies with low equity base, low turnover but issuing shares at a hefty premium. Similarly, companies with low capital base but high turnover may also come under the scanner. Companies with high levels of leverage due to heavy borrowings may appear on the radar, too, with inter- corporate dealings to be one of the criteria that will attract scrutiny. “If something like this was in place, with adequate disclosure norms, we could have spotted the build-up of stress in IL&FS much earlier,” a source told TOI.