ED raids over 50 sites linked to Anil Ambani in Rs 3,000 crore Yes Bank loan fraud

The Enforcement Directorate (ED) conducted raids on Wednesday at more than 35 locations and over 50 companies connected to Anil Ambani’s Reliance Group, also known as RAAGA companies. These searches are part of a money laundering investigation related to the Yes Bank loan fraud case.

What Is the Case About?

The investigation is based on two FIRs filed by the CBI and additional information shared by several agencies, including:

• SEBI (Securities and Exchange Board of India)
• National Housing Bank
• Bank of Baroda
• National Financial Reporting Authority (NFRA)

According to the ED, Yes Bank gave loans of about ₹3,000 crore between 2017 and 2019 to certain companies. But instead of using the money for business purposes, a large portion of it was allegedly diverted to shell companies (firms that exist on paper but have no real operations) and other related entities.

Serious Irregularities Found in Loan Process

The ED says its initial investigation uncovered several serious issues with how Yes Bank approved and disbursed these loans. Some of the key findings include:

• Back-dated documents (loan paperwork was created with earlier dates to make things look legal)
• No proper checks done before approving loans
• Loans given to financially weak companies
• Common directors in different borrower companies (raising suspicion of coordinated wrongdoing)
• Violations of loan terms
• Evergreening of accounts (giving new loans to cover old unpaid ones)
• In some cases, the loan amount was released on the same day, or even before the loan approval date

These findings raise questions about possible corruption, including bribery of Yes Bank officials, such as the bank’s former promoter. Top officials of Yes Bank cleared loans of around Rs 3,000 crore to companies helmed by Anil Ambani without due diligence after they were bribed. These massive loans were cleared between 2017 and 2019.

According to sources, the central agency has detected an “illegal quid pro quo arrangement” as part of which Yes Bank promoters allegedly received payments in privately held concerns just before sanctioning the loans.

The probe has found “serious violations” in the loan approval process. Credit Approval Memorandums were backdated and investments were pushed without due diligence or credit analysis in violation of the bank’s policies. Also, loan funds were routed to shell companies and other group entities in breach of the original loan terms.

The ED has identified several red flags in the loan clearances — money disbursed to entities with poor financials, common addresses and directors among borrower companies, lack of proper documentation, and evergreening of group corporate loans. Some loans were disbursed even before formal sanction, while others were disbursed on the day they were applied for.

Over 50 Companies and 25 People Under Investigation

The ED is now examining over 50 companies and 25 individuals for their possible roles in this fraud. SEBI has also submitted a report about Reliance Home Finance Ltd (RHFL)—a company under the Reliance Group. SEBI observed that RHFL’s corporate loan book doubled within just one year, which hints at serious irregularities and possible violations in the loan approval process.

These raids are being carried out under Section 17 of the Prevention of Money Laundering Act (PMLA), which allows the ED to search premises if it believes money laundering has occurred.