New Delhi, Jul 19 (IANS): Crisis-hit IL&FS on Thursday said that the first phase of forensic audit of credit rating agencies which have been engaged with the its group companies for the last ten years is complete.

The IL&FS Board had appointed accounting and advisory firm Grant Thornton to conduct the audit, which has submitted its findings in the interim report to IL&FS, the lending company said in a statement.

"The audit evaluates the role of CRAs in rating various debt instruments and facilitating excessive borrowings from money markets across Group companies that eventually led to defaults," it said.

CARE, ICRA, India Ratings and Brickwork have been the main rating agencies for ITNL, IFIN and IL&FS during the period reviewed by Grant Thornton.

Brickwork was introduced in ITNL and IFIN from 2016, replacing CRISIL, during this period under review.

Rating agencies along with audit firms and erstwhile IL&FS management have been under the scanner ever since the crisis came to light with the lending major defaulting on its commercial papers in September last year.

According to an investigation report submitted to the Ministry of Corporate Affairs (MCA) by Serious Fraud Investigation Office (SFIO), the credit rating agencies played major villain in the IL&FS crisis as they adjudged positive and impressive ratings on a regular basis to commercial papers and non-convertible debentures (NCDs) of IL&FS Financial Services (IFIN) despite unhealthy financial condition of the company.

The document shows that several investors who subscribed to the IL&FS' financial arm's NCDs and commercial papers, attributed their decision to invest on the high ratings accorded by the rating agencies.

Interestingly, both Care Ratings and ICRA have of late sent their chiefs on leave until further notice after the recent allegations and investigation.