Mr Bawa has been arrested under Section 447 of the Companies Act.Former ILFS Financial Services CEO Ramesh Bawa was arrested by the Serious Fraud Investigation Office (SFIO), the investigating arm of Ministry of Corporate Affairs, on Friday, after the Supreme Court refused to grant him protection from apprehension.

 The matter relates to a series of defaults by Infrastructure Financing and Leasing Services (ILFS) on its debt obligations last year, underlining the broader concerns about the financial health of the country's non-banking financial service sector.

Bawa had resigned as Chief Executive Officer and Managing Director of ILFS Financial Services in September last year. Bawa was held under Section 447 of the Companies Act that enables the investigating arm of the Ministry of Corporate Affairs to make an arrest for committing fraud.

His arrest comes two weeks after the arrest of former ILFS  chairman Hari Sankaran for fraud. The agency had accused Sankaran of granting loans to entities that were not credit-worthy or had declared Non-Performing Assets (NPAs) causing massive losses to the company and its creditors.ILFS is reeling under debts to the tune of Rs.

91,000 crore.

The government took control of the heavily indebted infrastructure financing and construction group in October last year. The alleged financial irregularities at ILFS came to light after some group entities defaulted on debt repayments. The Enforcement Directorate is also probing the alleged irregularities.

In February, It had registered a case of money laundering against ILFS Rail, ILF Transportation Networks, Ravi Parthasarathy, Hari Sankaran and Ramesh Bawa.ILFS was incorporated in 1987, initially promoted by the Central Bank of India, Housing Development Finance Corporation and Unit Trust of India.(With inputs from agencies)Get the latest election news, live updates and election schedule for Lok Sabha Elections 2019 on TheIndianSubcontinent.com/elections.

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