6 days ago
Anil Ambani's firms were under scanner of banks & SEBI before ED tightened noose around him
One involves a company allegedly incorporated by Ambani in 2006, with employees of the Reliance Group as directors and authorised signatories, according to findings of the Securities and Exchange Board of India. The second relates to a series of loans extended by Yes Bank during the tenure of its former chairman and managing director, Rana Kapoor.
New Delhi: As the Enforcement Directorate (ED) tightens the noose around Reliance Group chairman Anil Ambani in a probe into an alleged loan diversion to the tune of Rs 14,000 crore, two central elements are under scrutiny in the case.
The summons came a week after the federal probe agency searched 35 locations across the country, including premises allegedly linked to him, in a money laundering case related to loans amounting to Rs 3,500 crore from Yes Bank to Reliance Commercial Finance Ltd (RCFL) and Reliance Home Finance Ltd (RHFL)—group companies of the Reliance Group, controlled by Ambani.
Additionally, another major Reliance Group firm, Reliance Communications, may face action from the Central Bureau of Investigation (CBI) after State Bank of India reportedly flagged its account as fraudulent. A complaint to the agency is in process of being filed.
An undisclosed controlled firm
Ambani has been summoned for questioning in a money laundering case linked to two CBI investigations initiated in September 2022, following a complaint by bank management alleging quid pro quo transactions between Reliance firms and Rana Kapoor.
The agency had booked Reliance Home Finance, Rana Kapoor and unidentified officials of these firms based on allegations that Yes Bank had invested Rs 2,965 crore in Non-Covertible Debentures of Reliance Home Finance (RHFL) between 2017 and 2019, when Kapoor was heading the bank's investment committee.
These investments were later classified as non-performing assets, amounting to Rs 1,353.50 crore as of December 2019.
The Yes Bank management alleged that forensic audits of these transactions revealed that the bank had invested these sums in RHFL after it extended two tranches of loans, each of Rs 60 crore, to RAB Enterprises and its 100 percent subsidiary, Bliss House, owned by Rana Kapoor's wife, Bindu Kapoor.
Similarly, the bank had invested Rs 2,045 crore in NCDs with RCFL during the same period, allegedly in exchange for RCFL granting loans of two tranches, each of Rs 225 crore, to RAB Enterprises and Imagine Estate, another firm owned by Bindu Kapoor.
According to the CBI FIR, Rana Kapoor did not disclose these transactions before Yes Bank made investments into these Reliance Group firms.
According to officials, loans amounting to thousands of crores from banks, especially Yes Bank, were allegedly diverted through an undisclosed related party, Cresta Logistics, and ultimately reached to Anil Ambani and his family members.
ThePrint reported that before searches by the ED, several financial watchdogs, including the Securities and Exchange Board of India (SEBI), shared their findings on the alleged misappropriation of loan amounts by Anil Ambani and his firms with the ED, providing fresh impetus to the investigation.
The market watchdog shared the findings of its investigation related to Reliance Infrastructure, Crest Logistics, and how Ambani allegedly floated the firm to divert funds taken as a loan from banks including Yes Bank – the funds were later written off, leading to financial gains at the expense of banks, especially Yes Bank.
Based on audited statements and financial records submitted by Reliance Infrastructure, the company had an exposure of Rs 9,010 crore in Crest Logistics, which increased to Rs 27,212 crore by 2022-23.
The outstanding amount on Crest Logistics, according to SEBI findings, was reduced by Rs 9825 crore in the financial year 2016-17, of which Rs 7,362 crore was written off solely through book entries and provisions, and not through repayment of loans Reliance Infra had extended to the firm.
SEBI noted in its findings that the majority of the Inter-Corporate Deposit (ICD) and advances extended by Reliance Infrastructure were for Crest Logistics. The firm was later renamed CLE Private Limited in December 2019.
It found that Reliance Infrastructure allegedly continued to extend advances to Crest Logistics despite having made provisions for losses from these advances in its balance sheet.
Between the financial years 2016-17 and 2020-21, Reliance Infrastructure wrote off Rs 10,017 crore without corresponding repayment of the advances. The write-offs were allegedly carried out through 'unexplained accounting adjustments', according to SEBI's findings.
According to SEBI, the firm consistently maintained its relationship with Exel Logistics on par with several other entities providing Engineering, Procurement, and Construction (EPC) services.
While the firm has maintained its financial transactions amounting to thousands of crores over the decade, it never disclosed that CLE Private Limited was a related party in its financial statements.
However, an investigation by SEBI found that a firm, Reliance HR Services, held the largest stake of 41.05 percent stake in the company.
The SEBI investigation also found that Yes Bank considered CLE a 100 percent subsidiary of the Anil Ambani-controlled group while extending credit between 2013 and 2018. The bank also stipulated that the shareholding structure should not change until the loan was repaid.
SEBI further found that as many as six former CLE directors held equivalent positions in one or more group companies of the Reliance Group. Among them was Madhukar Moolwaney, Reliance Infra's Chief Financial Officer, was CLE's director for a decade between 2003 and 2013.
The market watchdog noted Moolwaney's statement that he was made CLE's director for a decade by the 'virtue of his employment with Reliance Infra' and that the firm was indirectly controlled by Anil Ambani and his selected group of 15-20 persons.
SEBI concluded that CLE made investments amounting to Rs 11,217 crore into several allegedly controlled by Anil Ambani, in which he and his family members were direct beneficiaries. However, advances , investment in preference shares and debentures by R Infra in CLE which was eventually written written off by R Infra formed the bulk source of such funds, the SEBI observed in its findings.
'CLE failed to respond to SEBI's repeated summons in this regard and failed to provide any rationale or explanation on these investments or source of funds. Similarly, R Infra failed to provide any explanation on their accounting adjustments on the outstanding of CLE, through which it wrote down over Rs. 12,035 Crore in CLE without any adequate disclosures, nor they have followed the rigors of statutory requirement with respect to related party transactions. No explanation has been offered by Mr. Anil Ambani also, whose presence is found at both the ends of the spectrum of transactions,' the SEBI observed in its investigation findings.
'Accordingly, it is concluded that the aforementioned entities were beneficiaries of the illegal diversion of funds from R Infra, the listed company, for the ultimate benefit of its promoter through a scheme of fund movements and accounting adjustments,' the watchdog documented in the finding shared with the ED.
Also Read: ED issues Lookout Circular against Anil Ambani in loan fraud case, hours after summons for questioning
SBI's inevitable complaint
SBI sent a letter to Reliance Communications on 23 June, informing the firm that it had flagged its loan account as a potential fraud account on 13 June.
This marked the second time in five years that the account had been classified as fraudulent. In November 2020, SBI had already marked the account as fraudulent and informed the Reserve Bank of India in line with its guidelines.
However, in the wake of orders from the Delhi High Court and the Supreme Court regarding the classification of firms and promoters accused of committing fraud, the bank reinitiated the process. In this, the SBI management issued a Show Cause Notice to Reliance Communications and Anil Ambani along with a forensic report of the firm to the directors to explain their case.
Anil Ambani presented his case before the bank's Fraud Identification Committee (FIC).
According to the bank's FIC, Reliance Infratel Limited (RITL) and Reliance Telecom Limited (RTL) – erstwhile subsidiaries of Reliance Communications – had received Rs 31,580 crore from banks, of which Rs 13,667 crore was used for repayment of loans. In comparison, Rs 12,692 crore was allegedly paid to connected companies.
The bank pinpointed transactions such as a Rs 250 crore loan from Dena Bank in February 2017 to Reliance Communications to deal with 'short-term cash flow mismatch and payment of dues, sundry creditors'.
The bank alleged that Reliance Communications passed on the loan amount to its subsidiary, Reliance Communication Infrastructure Limited (RCIL), as an ICD, while claiming that the funds were used to pay dues to BNP Paribas Bank.
The bank further found that NBFC India Infrastructure Finance Company Ltd (IIFCL) sanctioned Rs 248 crore to Reliance Communications for capital expenditure, which was passed on to its subsidiaries, RITL and RIEL, in the amounts of Rs 63 crore and Rs 77 crore, respectively.
The bank further alleged that there were inter-company loan transfers in which Reliance Communications transferred Rs 783.77 crore to RTL and Rs 1,435 crore to RITL from loans obtained from the banks.
The Reliance Group argued before the bank that Reliance Communications always functioned as a borrowing group that included all these subsidiaries. Hence, inter-company transfer allegations were not applicable against them.
The bank committee, on the other hand, asserted that these firms had not made the transfers directly but routed them through associates and other subsidiaries, raising suspicions that those transactions were sham and allegedly carried out through the manipulation of the books of accounts, ultimately to misappropriate funds.
Union Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha on 22 July that SBI had an exposure of around Rs 3,000 crore in Reliance Communications. This included the principal outstanding amount of Rs. 2,227.64 crore, along with accrued interest and expenses as of 26 August, 2016, and a bank guarantee of Rs 786.52 crore.
'On 24.06.2025, the bank has reported classification of fraud to RBI, and is also in the process of lodging a complaint with CBI,' he further informed the Lower House just a day before the ED started conducting raids on premises linked to his companies that lasted for four days.
(Edited by Sugita Katyal)
Also Read: 'Corruption follows those in power like shadow'—HC rejects IAS officer's anticipatory bail in bribery case
