Road construction takes place near the IL&FS building in Mumbai. (Photographer: Abhijit Bhatlekar/Bloomberg News)

SFIO Arrests Former IL&FS Financial Services CEO Ramesh Bawa

Making its second arrest in the IL&FS case, the Serious Fraud Investigation Office on Saturday arrested the former chief of financial services of the conglomerate, Ramesh C Bawa, according to people in the know.

The people said Bawa, who had served as managing director and chief executive officer, was arrested on the grounds of abusing his powers at the company through fraudulent conduct. He also granted loans to entities which weren't creditworthy and caused wrongful loss to the company and its creditors, the said.

Earlier this month, the probe agency arrested former IL&FS vice chairman Hari Sankaran.

Also read: SFIO Arrests Former IL&FS Vice Chairman Hari Sankaran

The people said IL&FS Financial Services Ltd. had borrowings of around Rs 17,500 crore through debt instruments and bank loans.

Provident funds, pension funds, gratuity funds, mutual funds as well as public and private sector banks are among the entities that have invested in these debt instruments.

The alleged financial irregularities at IL&FS came to light last year after some group entities defaulted on debt repayments. The government, which superseded the company's board, is working on a resolution plan.

Also read: IL&FS Board Appoints Three Advisors To Develop Resolution Plan

The SFIO is probing the affairs of IL&FS and its group entities.