The Serious Fraud Investigation Office on Monday arrested former Managing Director and Vice Chairperson of Infrastructure Leasing and Financial Services Hari Sankaran. Sankaran, arrested in connection with investigation into defaults at IL&FS, was produced in a special court in Mumbai, which remanded him in custody till April 4, Mint reported.

The Serious Fraud Investigation Office said in a statement after Sankaran’s arrest that he granted loans to IL&FS subsidiaries which were not creditworthy, or were declared as non-performing assets. His transactions resulted in losses for the company and its creditors, the office added.

“It may be worth noting that IL&FS Financial Services Ltd had borrowings of more than Rs 17,000 crore from debt instruments and bank loans,” the office said. “Provident funds, pension funds, gratuity funds, mutual funds, public and private sector banks, are among those who have invested in these debt instruments.”

The Serious Fraud Investigation Office had filed two reports at the National Company Law Tribunal, alleging that the practices followed by IL&FS flouted banking and lending norms. The office also claimed that the IL&FS subsidiaries’ auditors were complacent about detecting financial irregularities.

Sankaran was removed from the IL&FS board of directors on October 2 last year. In a submission to the NCLT, he had denied any wrongdoing on his part. “All material acts of IL&FS were performed with the sanction and knowledge of the board and key shareholders of IL&FS and as per approved processes and procedures,” he told the tribunal in October last year.