After Raids, ED Summons Anil Ambani In Rs 17,000-Crore Loan Fraud Case

Anil Ambani is summoned by the Enforcement Directorate in connection with a loan fraud investigation exceeding Rs 10,000 crore linked to his business group. The inquiry examines serious allegations of financial misconduct and irregularities.

The Enforcement Directorate (ED) has summoned Anil Ambani, Chairman of the Reliance Group, for questioning on 5 August. This is part of an investigation into a "loan fraud" case involving his group companies, according to sources cited by Economic Times. Ambani is expected to appear at the ED headquarters in Delhi, where his statement will be recorded under the Prevention of Money Laundering Act (PMLA).

Last week, the ED conducted searches across multiple companies and executives linked to Ambani's business group. These raids, which began on 24 July and lasted three days, targeted over 35 locations in Mumbai connected to 50 companies and 25 individuals, including key executives from the Anil Ambani Group.

Loan Diversion Allegations

The investigation by the ED focuses on alleged financial irregularities and a collective loan diversion exceeding Rs 10,000 crore by various group companies. The agency is specifically probing claims of an illegal diversion of approximately Rs 3,000 crore in loans extended by Yes Bank to the group between 2017 and 2019.

In response to these developments, Reliance Power and Reliance Infrastructure informed stock exchanges that while they acknowledge the ED's actions, the searches have had "absolutely no impact" on their business operations, financial health, or stakeholder interests.

Complex Financial Misconduct

The ED is investigating a complex web of alleged financial misconduct involving the Anil Ambani Group. This includes large-scale loan diversion and suspected bribery linked to Yes Bank. According to sources within the ED, Yes Bank promoters allegedly received funds in their associated entities just before sanctioning loans, suggesting a possible quid pro quo arrangement.

The agency is scrutinising serious irregularities in the loan approval process. Allegations include back-dated credit approval documents, proposals made without due diligence or credit analysis, and investments in financially weak entities. Several loans were allegedly diverted through shell companies or routed to group entities sharing common addresses and directors.

Regulatory Investigations

The money laundering probe is based on at least two FIRs filed by the Central Bureau of Investigation (CBI), along with reports from regulatory bodies like SEBI, the National Housing Bank, the National Financial Reporting Authority (NFRA), and Bank of Baroda. These documents reportedly outline a "well-planned scheme" to siphon public funds, defrauding banks, investors, and public institutions.

The Union government recently informed Parliament that the State Bank of India has classified Reliance Communications (RCOM) and Anil Ambani as "fraud" and is preparing a formal complaint to the CBI. The ED is also investigating a Rs 1,050 crore bank loan fraud involving RCOM and Canara Bank, as well as alleged undisclosed foreign assets and bank accounts.

The agency is examining a Rs 2,850 crore investment by Reliance Mutual Fund in AT-1 bonds due to suspicions of quid pro quo. AT-1 bonds are high-risk instruments used by banks to shore up capital; this investment is under review for potential misuse.

An alleged Rs 10,000 crore loan diversion involving Reliance Infrastructure and a SEBI report on Reliance Home Finance Ltd (RHFL) are also part of the ongoing probe. The media reports suggest that these allegations concern transactions related to Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL), which are over ten years old.