In a boost for investigators probing the wrongdoings of India’s leading infrastructure lender Infrastructure Leasing & Financial Services, the Supreme Court has allowed reopening of its accounts for the last five years.

The Serious Fraud Investigation Office (SFIO) is currently investigating the case related to defaults by IL&FS and 169 subsidiaries on its interest payments last year that triggered a major liquidity crisis in the country’s non-banking finance company sector.

IL&FS has also defaulted on payment of loans to Small Industries Development Bank of India and along with its subsidiaries has a combined debt of over 910 billion rupees (US$13.2 billion).

The debt crisis at the infrastructure lender came to light following a series of defaults by its group companies beginning September 2018. The government dismissed the IL&FS board and appointed a new one, headed by well-known banker Uday Kotak, to plan its revival.

The SFIO in April arrested Hari Sankaran, the former IL&FS managing director and Ramesh C Bawa, former IL&FS Financial Services chief in connection with its probe into loan defaults.

During its investigation, the SFIO found gross violations by IL&FS and its subsidiaries while carrying out credit appraisal and monitoring.

It found that subsidiary IL&FS Financial Services (IFIN) did not have a single borrower with AAA rating by 2017, even as its exposure to unrated borrowers rose to 25% of the asset book.

The crisis also brought to light the dubious role played by some reputed and leading auditing firms such as Deloitte Haskins and Sells (DHS) and BSR and Co, a unit of KPMG.

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The IL&FS board alleged that the two companies failed to issue warnings about shortcomings while auditing the books of IFIN and called for blacklisting the two audit firms. Meanwhile, SFIO has decided to investigate 35 audit firms having links with IL&FS and its subsidiaries.

Road Transport and Highways Minister Nitin Gadkari has offered assurances that the new government will resolve the stalled projects of IL&FS. He said around 25-30 projects of IL&FS have been stalled due to the debt crisis and his government will bring the number down to zero in 100 days.