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Why ED raided Anil Ambani's Reliance Group-linked 50 companies
The CBI cases pertain to loans extended by Yes Bank to Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL).
The Enforcement Directorate (ED) on Thursday carried out extensive raids at 35 locations across India as part of a probe into alleged loan fraud involving companies of Anil Ambani-led Reliance Anil Dhirubhai Ambani Group (ADAG).
As previously reported by Hindustan Times, citing officials familiar with the matter, the searches were conducted at premises linked to over 50 companies and 25 individuals.
The raids are part of a money laundering investigation initiated under the Prevention of Money Laundering Act (PMLA), based on two FIRs originally filed by the Central Bureau of Investigation (CBI) in September 2022.
Yes Bank loans to Reliance firms under scrutiny
The CBI cases pertain to loans extended by Yes Bank to Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL). Both FIRs name former Yes Bank chairman Rana Kapoor.
An officer from the probe agency said, “Preliminary investigations have revealed a well-planned and thought-after scheme to divert or siphon off public money by cheating banks, shareholders, investors, and other public institutions.”
He further added, “The offence of bribing bank officials, including founder of Yes Bank [Rana Kapoor] is also under scanner."
A second official involved in the investigation said ED suspects illegal diversion of around ₹3,000 crore in loans issued by Yes Bank between 2017 and 2019.
“We have also found that just before the loan was granted, the Yes Bank promoters [Kapoor] received money in their concerns. The ED is investigating this nexus of bribe and the loan,” the officer added.
Another ED official highlighted “gross violations” in loan approvals, pointing to systemic lapses in Yes Bank’s internal processes. “Credit approval memorandums (CAMs) were back-dated, investments were proposed without any due diligence or credit analysis in violation of the bank’s credit policy,” the officer said.
Loans routed through shell firms and group companies
Investigators have uncovered evidence of loan diversions to multiple group companies and shell firms, flouting the terms of lending. The agency also identified several red flags, including:
- Loans to financially weak entities
- Absence of proper documentation
- Borrowers with common addresses and directors
- Loans disbursed on or before the application date
- Evergreening of loans
- Misrepresentation of financial data
“These findings clearly indicate a pattern of financial mismanagement and manipulation,” an officer said.
The ED is also probing a sharp increase in corporate loans disbursed by RHFL, which jumped from ₹3,742.60 crore in FY 2017–18 to ₹8,670.80 crore in FY 2018–19.
Apart from the CBI, several regulatory and financial institutions including the Securities and Exchange Board of India (SEBI), National Housing Bank, National Financial Reporting Authority (NFRA), and Bank of Baroda have also provided inputs to the ED as part of the investigation.
According to a Reuters report, shares of Reliance Infrastructure and Reliance Power dropped by up to 5% on Thursday following reports of ED probe.
Reliance Group's statement
In response, Reliance Infrastructure and Reliance Power issued a statement: “The media reports appear to pertain to allegations concerning transactions of Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL) which are over 10 years old,” the companies said.
They further added, “RCOM is undergoing Corporate Insolvency Resolution Process as per the Insolvency and Bankruptcy Code, 2016 since over 6 years. RHFL has been fully resolved pursuant to the judgment of the Hon’ble Supreme Court of India. Similar allegations as those set out in the media reports are sub-judice and pending before the Hon’ble Securities Appellate Tribunal, as per publicly available information.”
(With inputs from Neeraj Chauhan in New Delhi)
