From July to September 2018, two out of IL&FS's 256 subsidiaries reported having trouble paying back loans and inter corporate deposits to other banks and lenders, resulting in the
RBI requesting its major share holders to rescue it. In July 2018,
Hindu Businessline reported that the road arm of IL&FS was having difficulty making payments due on its bonds. In the same month, Business Standard reported that its founder Ravi Parthasarathy would be leaving the firm for medical reasons, after having headed the firm for 30 years. In early September 2018,
Moneylife India reported that one of IL&FS's subsidiaries had been unable to repay a ₹1,000 crore short-term loan taken from
SIDBI, resulting in SIDBI asking one of its officers to resign. Subsequently, Bloomberg Quint, Business standard and
Economic times reported that one of the IL&FS group of companies called IL&FS Financial Services Limited had defaulted on its commercial paper payments. This led to news of a possible audit by the
Reserve bank of India. IL&FS Financial Services Ltd., one of the group's many financial subsidiaries had defaulted on repaying about ₹450
crore worth of inter-corporate deposits to
Small Industries Development Bank of India (SIDBI). On 27 September 2018, IL&FS Financial Services informed the
Bombay Stock Exchange that it had defaulted on a ₹52.4 crore repayment of short-term deposits and ₹104 crore term deposit. A similar letter was published by IL&FS Transportation. On 1 Oct 2018, the
Government of India took steps to take control of the company and arrest the spread of the contagion to the financial markets. A new board was constituted as the earlier board was deemed to have failed to discharge its duties. The new board consisted of
Kotak Mahindra Bank managing director
Uday Kotak, former
IAS officer &
Tech Mahindra boss
Vineet Nayyar, former
Securities and Exchange Board of India chief
G N Bajpai, former
ICICI Bank chairman
G C Chaturvedi, former IAS officers
Malini Shankar and Nand Kishore. Currently the CMD of new IL&FS Board is Mr Nand Kishore who was appointed the Chairman and Managing Director after the term of Mr C S Rajan ended on September 30, 2024. The
Serious Fraud Investigation Office (SFIO) started an investigation as there were huge procedural lapses and top management was not reachable. Newspapers reported the lavish salaries earlier management had given itself at the expense of public money. In the absence of adequate supervision by the RBI or shareholders or any
claw back provisions on
remuneration, the erstwhile management treated the company as its fiefdom. On 2 April 2019, the SFIO arrested the former vice-chairman of IL&FS,
Hari Sankaran, in
Mumbai for fraud and causing wrongful loss to the troubled infrastructure lender. He was accused of granting loans to entities that were not credit-worthy or declared as non-performing accounts causing loss to the company and its creditors. The SFIO was granted custody of Sankaran till 4 April. The initial SFIO probe revealed that there were major lapses in
Deloitte's audit of the IL&FS. The Government had moved to ban Deloitte for its role in the default. However, the
Bombay High Court passed an interim order to prevent "coercive action" by the Government against the firm. == Debt Resolution ==