Mumbai, Apr 2 (IANS): In its first arrest in its probe into fraud-hit Infrastructure Leasing and Financial Services (IL&FS), the Serious Fraud Investigation Office (SFIO) on Monday arrested the lender's ex-Chairman Hari Sankaran, a official statement said on Monday.

Sankaran was produced before a special court here which sent him to SFIO's custody till Thursday.

"Hari Sankaran has been arrested in connection with the ongoing investigations in to the affairs of IL&FS and its group entities.. He has been arrested on the grounds of abusing his powers in IL&FS Financial Services Ltd," the SFIO, which is probing IL&FS under provisions of the Companies Act, said.

It has accused Sankaran - part of the erstwhile ILFS board - of granting loans to entities that were not creditworthy or declared Non-Performing Assets (NPAs), this causing huge losses to the company and its creditors.

The IL&FS Financial Services Ltd had notched borrowings of over Rs 17,000 crore from debt instruments and bank loans.

Besides, provident, pension, gratuity and mutual funds, public and private sector banks were among who have invested in these debt instruments.

Last year, the Central government superseded the management of the beleaguered company, which has around Rs 91,000 crore in long-term debt, through a National Company Law Tribunal (NCLT) order and appointed a six-member board led by Uday Kotak, MD and CEO of Kotak Mahindra Bank, to restore its financial solvency.