Reliance Group: Enforcement Directorate (ED) made huge raids at 35 places throughout India on Thursday under investigation of what is perceived as a loan fraud by the companies of Anil Ambani led Reliance Anil Dhirubhai Ambani Group (ADAG).
Anil Ambani, who is the chairman of Reliance Anil Dhirubhai Ambani Group(File Photo/Reuters)
India:Anil Ambani The chairman of the Reliance Anil Dhirubhai Ambani Group (File Photo/Reuters)
The searches were carried out at the premises of more than 50 firms and 25 people, as Hindustan Times reported earlier referring to officials that have been aware of the case.
These raids are in connection with a money laundering probe launched under the umbrella of the Prevention of Money Laundering Act (PMLA) under two FIRs, which had been first registered in September 2022 by the Central Bureau of Investigation (CBI).
Yes Bank is in trouble with Reliance companies
The cases filed by CBI are linked with the loans given out by the Yes Bank to Reliance Home Finance Ltd (RHFL) and Reliance Commercial Finance Ltd (RCFL). The two FIRs identify former Yes Bank chairman Rana Kapoor.
According to an officer, who spoke to the probe agency, a very organized and thought-after plan to get or defraud the government of its money as a result of cheating the banks, shareholders, investors, and other governments has been identified in preliminary investigations.
He added further, that the crime of bribing the bank officials including founder of Yes Bank [Rana Kapoor] is also under scanner.
The second official associated with the investigation told that ED suspects that 3,000 crores of loans given by Yes Bank between 2017 and 2019 were illegally diverted.
We have also observed that minutes prior to granting of the loan, the promoters of Yes Bank [Kapoor] were given some money in their concerns. The officer added that, the ED is looking into this nexus of bribe with the loan.
The other ED official who described the situation was of gross violations during the granting of loans and it was due to systemic failures of Yes Bank. The officer said that, some credit approval memorandums (CAMs) were back-dated, investments were proposed without any due diligence or credit analysis that fail to meet the bank credit policy.
This is via shell companies and group companies receiving loans
It has been found that investigators have unearthed loan diversion to various group companies and shell companies in violation to lending terms. The agency as well found several red flags which include:
Advances to the financially poorly placed institutions
Lack of proper records
Common address taking and common directors
Loans issued before and up to the day of the application
Constant extension of loans
Fraudulent reports of the finances
According to an officer, these findings are a determinant of existing pattern of financial irresponsibility and manipulation.
The ED is also investigating the sudden rise in the corporate lending given by RHFL, that has risen to 8,670.80 crores in FY 2018 19, an increase of 3,742.60 crores in FY 2017 18.
Other regulatory and financial organizations such as the Securities and Exchange Board of India (SEBI), National Housing Bank, National Financial Reporting Authority (NFRA) and the Bank of Baroda besides the CBI have also furnished inputs to the ED in wake of the investigation.
Shares of Reliance Infrastructure and Reliance Power declined up to 5 per cent on Thursday on reports that ED was investigating them, Reuters reported.
The statement of Reliance Group
Reliance Infrastructure and Reliance Power responded with a statement: “The reports in media seem to relate to the allegations against transactions of Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL) that are more than 10 years old” the companies added.
They also stated that, RCOM has been in the process of Corporation Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 more than 6 years. The issue of RHFL has survived fully as per the decision of Honble Supreme Court of India. There are aforementioned similar allegations which are still sub-judice and pending before the Hon Securities Appellate Tribunal, according to information in public domain.”
The SEBI recently alerted the ED regarding one of its firms, Reliance Housing Finance limited (RHFL) which it claims to have bungled the finances. Explosive surge in corporate advances by RHFL, amount getting increased to Rs 8,670.80 crore in Financial Year 2018-19 as compared to Financial Year 2017-18 Rs 3,742.60 crore is also under the ED scanner. They reported, issues of inconsistent and rush up approvals, process deviations and a lot of other illegalities have been identified.
One of the violations committed earlier in September, 2024 concerned the diversion of loans by the non-executive director-Jai Anmol Ambani of RHFL, which the SEBI had fined an amount of Rs 1 crore. Even the chief risk officer of RHFL Krishnan Gopalakrishnan was fined by the SEBI to Rs 15 lakh.
The State Bank of India (SBI) has also declared RAAGA company, Reliance Communications (RCom) and the Ambani himself as the accounts under the category of frauds.
Reports have also mentioned that there is the alleged requirement of senior Yes Bank executives and promoters in allowing these irregular loans. The investigating agency is of the opinion that the top officials in the bank might have been given personal incentive or reward in granting big loans to some of the companies in RAAGA without any security.
Some of the regulatory and financial agencies have submitted their findings to the ED, such as National Housing Bank (NHB), securities and Exchange board of India (SEBI), the National Financial Reporting Authority (NFRA) and Bank of Baroda.
SEBI has filed a report identifying grave irregularities in one of the Reliance group companies, called Reliance Home Finance Limited (RHFL). The report said that the range of loans in the corporate segment of the firm had almost doubled Rs 3,742 crore in FY 2017-18 to Rs 8,670 crore in FY 2018-19.
Individually, the State Bank of India (SBI) has labeled one of the group companies of Anil Ambani, Reliance Communications (RCom) and Mr Ambani himself as “fraud” accounts.
The bank is not the first time to label the account as a fraudulent one. SBI had previously reported RCom and Mr Ambani as fraud accounts in November 2020, and on January 5, 2021, such a complaint was presented to the CBI. Subsequently on January 6, the Delhi High Court passed a status quo on the complaint and the same was withdrawn.
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