Anil Ambani, Chairman of the Reliance Group, has been summoned by the Enforcement Directorate (ED) for questioning on August 5 in connection with an alleged loan fraud and money laundering case. This development follows raids conducted by the ED on multiple locations linked to the Reliance Group in Mumbai. The ED's investigation revolves around the alleged diversion of funds from loans granted by Yes Bank to Ambani's group companies between 2017 and 2019.

The Allegations

The ED is investigating alleged irregularities in loans worth approximately ₹3,000 crore (Rs 30 billion). However, other reports suggest the ED is investigating an alleged ₹17,000-crore (Rs 170 billion) loan fraud case. The agency suspects that these loans were improperly diverted to various group and shell companies. This alleged diversion of funds constitutes a key aspect of the money laundering investigation.

ED Raids and Investigation

On July 24, the ED conducted searches at over 35 premises in Mumbai, covering 50 companies and 25 individuals connected to the Reliance Group. These actions were carried out under the Prevention of Money Laundering Act (PMLA). During the investigation, the ED scrutinized Yes Bank's loan approvals to Reliance Group companies, uncovering what they believe to be gross violations, including backdated Credit Approval Memorandums, a lack of due diligence, and breaches of the bank's credit policies. The ED has also reportedly found evidence of loans being given to entities with weak financials, shared addresses and directors, and poor documentation, with investigators further alleging that loans were being kept afloat through a process called ‘evergreening’.

Role of Other Agencies

The ED is not the only agency involved in scrutinizing the dealings of Anil Ambani's group companies. Multiple agencies, including the Securities and Exchange Board of India (SEBI), the National Housing Bank, the National Financial Reporting Authority (NFRA), and the Bank of Baroda, have reportedly shared relevant information with the ED. SEBI, in particular, is said to have provided the ED with its findings in the case of Reliance Home Finance Limited (RHFL). Furthermore, a SEBI probe revealed the alleged diversion of ₹10,000 crore (Rs 100 billion) by Reliance Infrastructure to Reliance Group units through an undisclosed related party.

Reliance Group's Response

Following the ED raids, Reliance Power and Reliance Infrastructure issued clarification letters to stock exchanges.

Potential Implications

The ED's investigation has potentially serious financial implications. The agency believes that a significant amount of public money, possibly in the range of ₹20,000-30,000 crore (Rs 200-300 billion), may have been siphoned off, including being moved to undisclosed foreign bank accounts. The investigation is ongoing, and further details are expected to emerge as the ED questions Anil Ambani and other individuals involved.