Anil Ambani summoned by ED in $361 million loan fraud case: Why is the probe agency investigating him

The Enforcement Directorate (ED) has summoned Reliance Group chairman Anil Ambani on August 5 for questioning in connection with an alleged Rs 3,000 crore worth bank loan fraud-linked money laundering case. This comes almost a week after the ED conducted simultaneous raids at premises linked to Anil Ambani's Reliance Group (RAAGA Companies) in connection with a money laundering investigation related to the Yes Bank loan fraud case. The raids were launched on July 24 as part of the alleged bank fraud as well as multiple other allegations of financial irregularities.

According to Indian news agency PTI, officials on Saturday last week said over 35 premises across Mumbai and Delhi, involving 50 companies and about 25 individuals, were being searched under the Prevention of Money Laundering Act (PMLA). Multiple reports quoted ED sources and indicated that they are investigating allegations of illegal loan diversion of approximately Rs 3,000 crore from Yes Bank between 2017 and 2019. The loan was reportedly diverted to shell firms and other group entities. Investigators have also discovered proof indicating possible bribery of Yes Bank officials, including its promoter.

Why is the ED investigating Anil Ambani?

The investigative agency highlighted serious lapses in the approval process of the Yes Bank to Reliance Anil Ambani Group Companies, which also includes backdated credit documents. It also found banks giving loans to organisations or firms with weak financials and common directors, and the absence of due diligence. ED has also noted violations of loan terms, evergreening of accounts, and instances showing disbursal on the same day as or before loan approvals, according to a report by ET. Meanwhile, Securities and Exchange Board of India (SEBI) has also submitted findings in connection with the Reliance Home Finance Ltd. (RHFL), showing corporate loan booking more than doubled within a year, which raises serious concerns about irregularities and process violations.

The ED claims this was a “well-thought-out and planned” scheme aimed at defrauding banks, shareholders, investors, and other public institutions by providing misleading information. The investigation uncovered several irregularities, such as loans given to unverified companies, the use of the same director and address across multiple firms, and a lack of loan documentation. It also discovered transfer of funds to shell companies and the issuing of new loans to repay old ones (loan evergreen strategy). The actions of the ED are based on two FIRs filed by the Central Bureau of Investigation (CBI), which alleged large-scale financial irregularities. Additionally, information from agencies like SEBI, the National Housing Bank, Bank of Baroda, and the National Financial Reporting Authority (NFRA) also contributed to advancing the investigation.

The State Bank of India (SBI) also declared Anil Ambani’s company Reliance Communications (RCom) and Anil Ambani himself as “fraudulent” a few years ago. SBI alleges RCom misused loans worth Rs 31,580 crore after taking them from the bank. Out of this amount, around Rs 13,667 crore was used to repay loans of other companies, while Rs 12,692 crore was transferred to other companies within the Reliance Group, according to a report in Dainik Bhaskar. SBI also said that it is in the process of filing a complaint with the Central Bureau of Investigation (CBI) regarding the matter. Additionally, personal insolvency proceedings against Anil Ambani are currently underway at the National Company Law Tribunal (NCLT) in Mumbai.

Reliance responds

Meanwhile, Reliance Infrastructure Limited (Reliance Infrastructure) and Reliance Power Limited (Reliance Power) released a statement clarifying that the recent actions have absolutely no impact on the business operations, financial performance, shareholders, employees, or any other stakeholders of Reliance Infrastructure and Reliance Power.