CHENNAI: On Thursday, the Enforcement Directorate (ED) conducted raids at more than 35 locations, involving 50 companies and approximately 25 individuals associated with Anil Ambani’s Reliance Group. This action was taken under Section 17 of the Prevention of Money Laundering Act (PMLA) in relation to an alleged loan scam worth Rs 3,000 crore linked to Yes Bank.

Preliminary findings indicate that the ED has discovered a “well-planned scheme” aimed at siphoning or diverting Rs 3,000 crore between 2017 and 2019. The agency suspects that bribes were paid into the personal accounts of Yes Bank promoters just prior to the disbursement of loans.

Yes Bank–Rana Kapoor Investigation

This case is part of a larger investigation that commenced in 2020, when the ED connected Anil Ambani’s group of companies—including nine entities that borrowed nearly Rs 12,800 crore—to money laundering activities involving Yes Bank’s former promoter, Rana Kapoor. Ambani underwent interrogation under PMLA provisions, with some sessions reportedly exceeding nine hours.

The 2020 investigation also included other significant borrowers such as Essel, DHFL, Cox & Kings, Jet Airways, and Indiabulls, concentrating on alleged kickbacks and irregularities in the loan approval process.

RCom Loan Fraud Allegations Involving Other Banks

In June 2025, the State Bank of India (SBI) independently categorized the loan account of Reliance Communications (RCom) and its promoters as “fraud” and subsequently reported the matter to the Reserve Bank of India (RBI). The total exposure amounted to Rs 2,227 crore in fund-based loans and Rs 786 crore in non-fund-based loans.

SBI’s classification highlighted serious allegations, including the diversion of funds, misuse of loan proceeds, circular transactions among group companies, and irregularities in invoices that remain unexplained.

This action followed a series of show-cause notices and forensic audits conducted in December 2023, March 2024, and September 2024, in accordance with the RBI’s revised fraud reporting guidelines.

SBI’s forensic audit uncovered that RCom and its associated entities borrowed more than ₹31,500 crore from multiple banks. Out of this amount, approximately Rs 13,667 crore (44%) was allocated to repay previous loans; Rs 12,692 crore (41%) was transferred to related parties; and over Rs 6,265 crore was reportedly misappropriated for unauthorized purposes.

The audit also pointed out a complicated strategy for intra-group fund movements, where loans were funneled through subsidiaries like Reliance Telecom (RTL) and Reliance Infratel (RITL) to settle unrelated debts.

Divergence Among Lenders: Canara Bank’s Reversal

Another lender, Canara Bank, had previously classified RCom’s account as fraudulent. However, in July 2025, it retracted this classification in the Bombay High Court, reversing its earlier position—showcasing inconsistencies in how banks are treating the same borrower.

In mid-2024, the RBI updated its Master Directions on Frauds, instituting a 21-day notice period and a fair hearing process for borrowers before any loan account is deemed fraudulent. These changes were instigated by Supreme Court remarks against previous unilateral actions by lenders.

Key Implications

Once an account is marked as fraudulent, the borrower is barred from obtaining new credit from regulated financial institutions for five years.

SBI’s choice to lodge a complaint with the CBI could initiate criminal investigations and potential legal actions against Anil Ambani and others involved. The reversal by Canara Bank has introduced regulatory uncertainty, as banks interpret similar forensic evidence in varying ways.

RCom and Anil Ambani’s Response

RCom maintains that under Section 32A of the Insolvency and Bankruptcy Code (IBC), it is protected from legal actions for activities conducted prior to the commencement of insolvency proceedings in June 2019. Anil Ambani’s legal representatives argue that he acted solely as a non-executive director, with no involvement in daily management.

The legal team representing Ambani has also indicated that SBI’s classification was made ex parte, lacking a comprehensive hearing or the disclosure of forensic findings, and that similar notifications against other independent directors had been previously retracted.

ED’s Investigative Focus and Legal Context

In the Yes Bank matter, the ED has claimed that there was a misappropriation of funds for unauthorized purposes, back-dating of Credit Approval Memorandums (CAMs), and insufficient due diligence. There are also allegations of bribery, as funds were allegedly transferred to the personal accounts of Yes Bank promoters just before loan approvals were granted. The ED’s investigation is being supported by information from various regulatory bodies, including the CBI, NHB, SEBI, NFRA, and Bank of Baroda.

According to Section 17 of PMLA, the ED has the authority to carry out searches and seizures to collect evidence in cases of suspected money laundering.

What Next

The ED will persist with interrogations and the gathering of evidence to establish the connection between diversion and bribery. SBI’s complaint may also lead to a CBI FIR and possible criminal charges. Furthermore, regulatory scrutiny regarding borrower classification and restructuring is expected to increase.

While the Rs 3,000 crore loan diversion case represents the most significant escalation in the ongoing Yes Bank investigation, which commenced in 2020 and involves several high-profile borrowers, including Anil Ambani, the changing status of “fraud” labels—coupled with RBI’s reforms and the varied responses from banks—indicates a rise in regulatory assertiveness and enhanced accountability in high-value corporate lending.