New Delhi: Former IL&FS MD and CEO Ramesh Bawa has been arrested by the Serious Fraud Investigation Office, two days after the Supreme Court dismissed his petition to stop criminal proceedings against him.
The arrest comes as part of SFIO’s investigation into IL&FS and its group companies.
Bawa resigned from his position in September 2018, after a series of defaults by IL&FS had sent fears of a market crisis.
This is the second arrest made by the SFIO in the case. Earlier this month, the agency had arrested former IL&FS chairman Hari Sankaran.
IL&FS, a major infrastructure financing and construction company, has a total debt of 910 billion rupees ($12.97 billion) and has been trying to sell its assets to repay debt after several defaults forced the government to overhaul its management.
Sankaran granted loans to entities, which were not creditworthy or have been declared non-performing assets, causing wrongful loss to the company and its creditors, Reuters quoted an official as saying.
IL&FS Financial Services had borrowings of more than 170 billion rupees ($2.46 billion) from debt instruments, bank loans and other investment firms, the official said.
A third of the total outstanding loans by a unit of IL&FS to borrowers were either unsecured or had inadequate collateral, a Grant Thornton India audit of the firm reported last month.
Bad loans at Indian banks reached a record $150 billion at the end of March, with state-run banks accounting for the lion’s share. The huge pile of bad debt has hurt the bottom lines of state-run banks and hindered their ability to issue new loans.