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 bank loans from YES Bank worth 30 billion rupees ($350 million) between 2017 and 2019 to many shell companies, the source said on condition of anonymity, as he is 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.
Reliance and YES Bank did not immediately 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.
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 nonperforming - and misrepresenting financials.
YES Bank's former promoter, Rana 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.
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.
Shares of Reliance Infrastructure and Reliance Power fell as much as 5% on Thursday after the news of the latest probe circulated.
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