IL&FS case: Ex-MD Bawa arrested for ’abuse of power’

NEW DELHI: The Serious Fraud Investigation Office (SFIO) on Saturday arrested former managing director and chief executive officer of IL&FS Financial Services, Ramesh C Bawa, in the second major arrest in the ongoing investigations into the affairs of Infrastructure Leasing and Financial Services (IL&FS) group, government officials said.

On April 1, SFIO had arrested Hari Sankaran, former vice-chairman and MD of IL&FS, for “abusing” his powers by granting loans to noncreditworthy entities. Bawa has been arrested “on the grounds of abusing his powers in IL&FS Financial Services Ltd through his fraudulent conduct and in granting loans to entities which were not creditworthy” that caused “wrongful loss to the firm and its creditors,” an official said on anonymity.

IL&FS Financial Services Ltd had borrowings of about ₹17,500 crore from debt instruments and bank loans.

The alleged financial irregularities at the IL&FS group came to light last year after some of the group companies defaulted on repaying loans. Reacting fast to save the non-banking financial institution, the government superseded the company’s board in October last year.

While the government is making efforts to revive the company through a resolution plan, its agency, SFIO, is probing the IL&FS case that involves a series of defaultsby the group, which has a debt burden of over ₹91,000 crore.

IL&FS started defaulting in repaying its loans since August last year that made the financial markets panicky and it faced a serious credit squeeze. Besides SFIO, ED is also probing the affairs of the group.