Ms McGarry withdrew from the SNP whip earlier this week as the police continued to investigate missing donations of tens of thousands of pounds from Women for Independence (WFI).
Mr Sillars said that Ms McGarry should have retained the SNP whip unless clear evidence emerged of wrongdoing against her and suggested that the party had rushed its response to the probe.
His intervention came as Ms McGarry was reported to have handed a four figure sum back to a pro-independence campaign before the group called in police.
Ms McGarry is understood to have given the four figure sum to WFI, the group she helped to found, after financial discrepancies were found in their accounts.
The MP has insisted that here has been no “wrongdoing on her part” after concerns were first raised during the summer.
Ms McGarry, who now sits as an independent MP, is understood to have attempted to resolve the situation with the payment late this summer.
A source close to the MP confirmed Ms McGarry had handed WFI the four figure sum as she had wanted to resolve what was a “shambles” over finances.