The Serious Fraud Investigation Office (SFIO) has said that Reserve Bank of India's (RBI) timely intervention could have helped detect crisis at Infrastructure Leasing & Financial Services (IL&FS) earlier, a media report said.
According to The Economic Times, IL&FS subsidiary IFIN was allowed to continue operations despite adverse RBI inspection reports. “Action at the right time may have prevented ballooning of the matter,” the SFIO was quoted as saying by the newspaper on the IL&FS matter.
The report further said that no penalties were imposed and IFIN was allowed to continue operations without any corrective measures.
Launching a massive crackdown on perpetrators of the IL&FS scam, the SFIO has charged the erstwhile top management members of the group's financial services subsidiary IFIN of forming a 'coterie' with its auditors and independent directors to defraud the company while running the business as their 'personal fiefdom', PTI reported on Sunday.
Officials also said it is just a tip of the iceberg in this massive fraud case, involving defaults totalling an estimated amount of over Rs 90,000 crore, as the SFIO's first charge sheet concerns just one entity, IFIN, and the probe is already underway against the parent firm Infrastructure Leasing and Financial Services Ltd (IL&FS) and several other subsidiaries.
The SFIO is also collecting details about all borrowings by IFIN from banks and through market instruments, as also about the role of banks and their officials and of credit rating agencies.
Last week, the National Company Law Appellate Tribunal (NCLAT) asked IL&FS group companies, which are being upgraded to the 'green' category, to start servicing their debts as per the payment schedule.
A two-member NCLAT bench headed by Chairman Justice SJ Mukhopadhaya said the IL&FS board should allow the new entities, which are coming into 'green' list from 'amber' to pay their debts after getting their terms-sheet approved by the retired Supreme Court judge Justice DK Jain.
Last month, Fitch Ratings said the debt crisis in IL&FS had adversely impacted the growth of the NBFC sector in India and might lead to its consolidation.
Non-banking financial companies (NBFCs) are commonly referred to as the shadow banking sector. The Indian shadow banking industry's rapid growth and reliance on short-term funding sources "bubbled over" in 2018, most evident by the default of Infrastructure Leasing and Financial Services (IL&FS) in September last year, Fitch Ratings report said.
With PTI inputs
Updated Date: Jun 03, 2019 14:53:33 IST