Former IL & FS President Ravi Parthasarathy Arrested In Rs 1 Lakh Crore Scam
On June 11, the Economic Offenses Wing (EOW) of the Chennai Police Department arrested Ravi Parthasarathy, the former chairman of the Infrastructure Leasing & Financial Services (IL&FS) group, in connection with the suspect. ₹ 1 lakh crore fraud which led to a liquidity crisis in the financial services market in 2018.
“The hub and mastermind of IL&FS 1 lakh crore scam Mr. Ravi Parthasarathy has been arrested by EOW in Crime No. 13 of 2020 dated 20.09.2020,” a statement issued by EOW Chennai.
According to the statement, the IL&FS group, which comprises around 350 companies, was manipulated as a “vehicle to perpetrate fraud” by the group’s then management, led by then chairman and CEO Ravi Parthasarathy.
The FIR was filed in response to a complaint filed by 63 Moons Technologies Ltd, which claimed to have lost ₹ 200 crore, according to EOW Chennai. The statement also highlights complaints from several other applicants.
The scam’s chief architect, Parthasarathy, has been taken into custody for 15 days and is awaiting a bail hearing on June 14.
Previously, the Madras High Court had rejected the accused Parthasarathy’s request for early bail.
The IL&FS crisis erupted in July 2018, when the company began to default on its loan repayments. When it began to default on bonds owed to investors in August 2018, the company collapsed.
By the time the group’s financial problem became known, the company, which started out as a road construction finance company, had quietly grown to number around 347 subsidiaries and had taken on debt of more than ₹91,000 crores. The non-bank financial corporation (NBFC) continued to refinance securities until everything stalled. Rating agencies, experts and regulators waited until the last minute to act.
When IL&FS finally began to default on its obligations to institutions, it sparked fear in the financial markets. In October 2018, the central government planned to control the IL&FS through a directive from the National Company Law Tribunal (NCLT) and established a panel led by senior banker Uday Kotak to initiate the process of resolving the l ‘IL&FS. At the new board’s first annual general meeting at the end of last year, Kotak said the new board hopes to collect at least half of the ₹ 90,000 crore of debt on IL&F via resolution. This project is still ongoing.
The Government of India (Gol) said in its petition: “Ravi Parthasarathy and his team were responsible for the negligence, incompetence and deception of the public in presenting attractive financial statements. IL&FS camouflaged its financial statements by hiding a serious mismatch between its cash flows. and payment obligations. also masked a total lack of liquidity and glaring adverse financial effects, ”reported The time of India.
IL & FS’s new management claim to have paid ₹ 43,000 crore in total group debt to date through asset sales and other cash receivables.
In addition, as part of its quarterly update on the progress of the current group resolution process, the company revealed on April 15 that it had increased the debt collection target to ₹ 61,000 crores.
According to MoneyControl news, as of October 2018, 186 of the 347 organizations under the IL&FS group had been resolved, while the remaining 161 were in various stages of resolution.
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