By Nikunj Ohri
NEW DELHI (Reuters) -India’s financial crime-fighting agency searched 35 locations linked to Reliance Anil Ambani Group as part of an investigation into alleged money laundering and siphoning of public funds, a government source said on Thursday.
The Enforcement Directorate alleges the group orchestrated a “well-planned” scheme to siphon off 30 billion rupees ($350 million) in loans from YES Bank to many shell companies between 2017 and 2019, the source said on condition of anonymity, as he was not authorised to speak to the media.
Anil Ambani’s Reliance Group entities are accused of paying bribes to YES Bank officials before loans were disbursed, the source said, adding that loan approvals violated the bank’s processes.
The probe also found gross violations in YES Bank’s loan approval process, such as lending to companies with weak financials, backdating credit memos, “evergreening” loans – issuing fresh loans to avoid labelling assets as non-performing – and misrepresenting financials.
A Reliance Group source said YES Bank had granted loans to Anil Ambani’s entities after following the due process, and the entire exposure was fully secured.
The allegation that bribes were given to secure loans was incorrect, the source said, adding that Reliance Home Finance (RHFL) extended fully secured loans on merit to privately-held companies of Rana Kapoor, the erstwhile promoter of YES Bank.
These loans were fully repaid, including interest, the source said.
Representatives for Reliance Group and YES Bank did not respond to requests for comment.
Several group firms of Anil Ambani, the younger brother of billionaire Mukesh Ambani, have gone into bankruptcy since 2017.
YES Bank, from which Anil Ambani group firms had borrowed heavily, was declared insolvent in 2020 and rescued by a group of Indian lenders in a plan approved by the central bank. Japan’s Sumitomo Mitsui Banking Corp is seeking a 20% stake in a deal that has yet to get regulatory approval.
Kapoor was charged with bank fraud by the financial crime agency in 2020 and later arrested. He pleaded not guilty and was granted bail in 2024 by a special court in India’s financial capital of Mumbai, according to local media reports.
REGULATORY ACTIONS
The financial crime agency can now seize or attach assets of Anil Ambani entities as the “proceeds of crime”, said Debopriyo Moulik, a lawyer at India’s Supreme Court. However, the group companies can challenge the agency’s findings in court, he said.
Anil Ambani’s group entities have been subject to several regulatory actions in recent years. In August 2024, the markets regulator SEBI barred Anil Ambani and 24 others from securities markets for five years, citing fund diversion from Reliance Home Finance.
The markets regulator has shared findings of its investigation on Reliance Home Finance with the financial crime agency, which is likely to investigate a sharp rise in corporate loans granted by the finance company, the source said.
Shares of Reliance Infrastructure and Reliance Power fell as much as 5% on Thursday after the news of the latest probe.
The companies issued similar statements to Indian stock exchanges saying the agency’s actions “have absolutely no impact on the business operations, financial performance, shareholders, employees, or any other stakeholders” of the two companies.
“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 statements said.
However, the government source said the agency’s investigation found Reliance Infrastructure diverted over 100 billion rupees disguised as inter-corporate deposits (ICD) to other Reliance group entities through an undisclosed, but related entity. ICDs are unsecured loans extended by one company to another.
An undisclosed related entity was used to bypass approvals from shareholders and the audit committee, the source said. The Reliance Group did not immediately respond to a separate Reuters’ request seeking a comment on these allegations.
Reliance Group’s businesses range from defence to power and infrastructure, although Ambani himself is not on the boards of any listed entities, following orders passed by the market regulator, which Ambani has challenged.
($1 = 86.3300 Indian rupees)
(Reporting by Nikunj Ohri in New Delhi; Writing by Shubham Batra; Editing by William Mallard and Rachna Uppal)
