The FIs have started hiring independent consultants of international standing to investigate whether companies which have gone down, and in which they have large financial exposures, were financially stripped by the promoters by way of diversion and siphoning-off of funds, sources said.

The FI approach is in line with international practices, where independent consultancy firms are often hired by lending agencies to look into financial misappropriations, including diversion of funds which may have played an important role in causing a financial crisis in a company.

The consultants will also be asked to look into the real assets on the grounds in case of companies which have run up large accumulated losses, said sources.

KPMG and Ernst & Young are among international consultancy firms which have been hired to look into the financial accounts and records of companies who FIs suspect indulged in diversion of funds and financial misappropriation.

Indian promoters have, for years, been accused of diverting funds to their closely-held companies in the form of capital investments or loans. Another charge often levelled against them is diversion of loans taken from FIs to projects unrelated to the ones for which the loans were given.

A large number of Indian firms, several of which belong to well-known business houses, have been accused of diverting funds, but were never charged officially by any lending agency of misappropriations due to lack of evidence for establishing criminal misconduct.

The managements, in defence, have termed such financial transactions as genuine investments which went wrong.

One of the biggest examples of investments by a large company into several privately-held companies is JCT Ltd, which is reported to have over Rs 270 crore locked up in such investments. The FIs have also taken a tough stand in the case of Essar Steel, which made large investments in businesses unrelated to its core steel business.

The FIs now seem to be turning to experts who have international experience in investigating cases of financial misappropriations including diversion of funds and money laundering etc and gathering evidence which is acceptable in courts in case of legal proceedings.