Congress leader Sanjay Nirupam has questioned why the Union finance ministry had ignored the Reserve Bank’s warning on Infrastructure Leasing and Financial Services (IL&FS), which has defaulted on payment commitments, and accused the Narendra Modi government of using the LIC and public sector banks to save sinking companies.

“Three years ago, the RBI had warned the finance ministry on IL&FS, yet no action was taken. Why? In the past two weeks or so, at least five directors have resigned from the board and the government has no clue where they are and what their plans are,” Nirupam told a media conference in Mumbai.

“These people should immediately be arrested and questioned what led to the company’s downfall. Their passports should be impounded so that they cannot flee the country like Nirav Modi and Mehul Choksi,” the Congress leader added.

IL&FS has piled up some Rs 91,000 crore in debt, despite its balance sheet problems. The subsidiaries, too, have reported losses in their investments in highways, metro, power and other infrastructure projects.

Nirupam alleged that the Centre had decided to use the LIC and public sector banks to pump more funds into IL&FS to save it.

“The funds with the LIC and the public sector banks are the hard-earned money of the common people of the country. The Narendra Modi government has decided to use these funds every time a company is on the verge of sinking. What the government is planning will bring further ruin to the economy,” he said.

The Mumbai Congress president said a meeting of the LIC and the State Bank of India was scheduled on Saturday to discuss the bailout package.

“The government should not add pressure on these two institutions to buy more shares of IL&FS. The company is dead and nothing can save it. Didn’t the directors know that the company did not have more than Rs 200 crore? What were they doing all this while? There should be a thorough probe by a competent authority,” Nirupam said.

The LIC owns the largest chunk of shares at 25.34 per cent, Central Bank has 7.67 per cent equity and the SBI another 6.42 per cent, taking the indirect government stake to nearly 40 per cent.

Nirupam alleged that two central ministers from Maharashtra had forced IL&FS to take highway and power infrastructure projects without proper feasibility studies.