Mumbai: The Enforcement Directorate (ED) on Wednesday conducted raids at several locations in Mumbai in connection with the IL&FS payment default crisis, officials said. The raids included locations belonging to Ravi Parthasarathy, former chairman of IL&FS.
Officials added that the raids were conducted against all the executives who were related to the Infrastructure Leasing and Financial Services (IL&FS). The raids were underway on Mumbai and Delhi-NCR locations, they said.
IL&FS has defaulted on payment of loans to SIDBI and along with its subsidiaries has a combined debt of over Rs 91,000 crore. The debt crisis at the infrastructure lender came to light following a series of defaults by its group companies beginning September 2018. A case has been registered in the alleged payment default case by the central probe agency under the Prevention of Money Laundering Act (PMLA).
On February 13, a Parliamentary panel suggested the setting up of a commission to conduct a probe in the IL&FS fiasco to find out the role of credit rating agencies (CRAs) in the case. The Standing Committee on Finance, in its report presented in Parliament, said the Government has since intervened and re-constituted the company’s board and the matter is being heard by the National Company Law Tribunal (NCLT).
“The Committee would recommend a comprehensive commission of enquiry into the whole gamut of the episode, which will inter-alia probe the role of CRAs that had over-rated the entities sometime before the crisis and the role of the largest institutional stakeholder in IL&FS, namely the LIC of India as well as other institutional stakeholders,” it said.
The Committee also suggested to the Finance Ministry and SEBI to explore the mandatory rotation of rating agencies along the lines of statutory auditors to avoid the pitfalls of long association between the issuer and the credit rating agency, particularly considering the recent instances of failure of CRAs in sensing simmering ‘trouble’ in their client-entities.
(With Agency inputs)