Essar Power stood as loan guarantor for Loop Telecom: Witness

V G Raghavan, a former Group Chief Financial Officer of Essar Group, said that there is no practice of any "counter guarantee" and commission from the group firms but it was done in the case of Loop Telecom.

He said the banks were reluctant to extend loan facility to Loop for want of adequate security and had sought guarantee from Essar group companies.

"Initially the bank (SBI) had indicated that it would be happy with the guarantee given by Essar Shipping Limited and Essar Steel Limited.

"However, subsequently, Essar Shipping Limited could not give the guarantee and the bank agreed to the guarantee of Essar Power Limited," he told Special CBI Judge O P Saini.

He said bank guarantee was given by Essar Group company as BPL Communications Limited, which later became Loop Telecom, was providing counter guarantee to Essar Steel Limited and it also benefited by charging a commission of one per cent annually of the guaranteed amount.

Essar Group promoters Ravi Ruia and Anshuman Ruia, Loop Telecom promoters Kiran Khaitan and her husband I P Khaitan are facing trial in the case on the charges of conspiracy to cheat the government.

Essar Group Director (Strategy and Planning) Vikas Saraf is also facing trial in the case along with three companies -- Loop Telecom Pvt Ltd, Loop Mobile India Ltd and Essar Tele Holding Ltd (ETHL).