IFIN violated RBI norms to help Sivasankaran pay off IFCI loan: SFIO

IFIN violated RBI norms to help Sivasankaran pay off IFCI loan: SFIO

New Delhi, Jun 4: Senior management of Infrastructure Leasing & Financial Services (IL&FS) violated several Reserve Bank of India (RBI) norms laws to help Chennai-based C Sivasankaran pay off IFCI’s loan when he was already a defaulter to IFIN (a subsidiary of IL&FS), the Serious Fraud Investigation Office (SFIO) has alleged.
In the chargesheet filed by the SFIO with the Special Sessions Judge (Companies Act) in Mumbai against 30 entities and individuals including IFIN, the former senior management of IL&FS, Deloitte and BSR & Associates, it said Sivasankaran was in desperate need to settle his outstanding accounts with IFCI and release his Chennai land mortgaged with the NBFC firm. Meanwhile, around Rs 50 crore was due for recovery by IFCI from Siva and it was not possible for an NBFC to lend to a defaulting borrower.
The management of IL&FS then allegedly colluded with Sivasankaran to create a unique structure wherein the NBFC gave its own land parcels in its group entity, Hill County Properties Ltd (HCPL) for development rights agreement with a Sivasankaran entity — Siva Shelters, despite Siva Shelters not being able to generate any revenue for IL&FS group from an earlier agreement to develop real estate.
Messages sent to Sivasankaran seeking his comment on the SFIO complaint did not elicit any response till going to press.
In an email in September 2017, Hari Sankaran, the former vice chairman of IL&FS, directed IFIN to keep the past exposures and the present securities as separate. He directed the IFIN officials to create a structure, in which the security was taken only for securitising the fresh disbursals and was not to be utilised for securitising the outstanding dues of around Rs 450 crore, in blatant violation of prudential norms of an NBFC, alleged SFIO.
“This email clearly brings out the connivance between Hari Sankaran and Sivasankaran wherein to please and for the various benefits derived from Sivasankaran, Hari Sankaran is compromising the assets of the company and also is ready to give away the funds borrowed from the public to Sivasankaran,” said the complaint.