Shares of Reliance Power Ltd (NSE: RPOWER) fell 3% on Thursday to ₹22.58, continuing a steep six-month decline of 50.54%.The fall comes after the Economic Offences Wing (EOW) of the Mumbai Police registered a complaint of cheating against several companies owned by Anil Ambani and their officials. The complaint, filed by Axis Bank vice-president Prakash Rao, alleges that the accused cheated the bank of ₹50 crore. Thursday’s complaint specifically names Reliance Commercial Financial Limited (RCFL), Reliance Infrastructure Limited, Reliance Power Limited, and other subsidiaries of the Anil Dhirubhai Ambani Group (ADAG). Senior executives such as Devang Mody (then CFO of RCFL), Amit Bafana (then CEO of RCFL), and Amitabh Jhunjhunwala (then VP of Reliance Capital Ltd) were also named, along with other officers, promoters, and “staffers of bank,” though the complaint did not specify which bank.
As per the complainant’s statement, Axis Bank in July 2010 had sanctioned a cash credit facility of ₹50 crores to Reliance Capital Limited. Subsequently, an additional non-fund-based banking capital limit of ₹20 crores was also sanctioned. In 2017 following the demerger of the commercial finance division of Reliance Capital Limited, these limits were transferred to Reliance Commercial Finance Limited (RCFL). In January, 2020, Axis Bank declared the cash credit account of RCFL as a non-performing asset. The company lenders approved a resolution plan by Authum Investments to recover the loan amount.In the interim, in August 2019, Bank of Baroda, acting as the lead bank of the consortium, had appointed Grant Thornton India LLP to conduct a Forensic Audit of RCFL’s loan default case.
The audit threw up various discrepancies like diversion of funds, round tripping and layering of transactions, non-compliance with Loan Covenants of RCFL, misrepresentation and suppression of material facts and possible evergreening and accommodation entries. Relying on this forensic report, an officer of the EOW, Mumbai, told the media: “There is prima facie evidence that the loan funds were diverted and siphoned off to group-related companies through non-standard business practices. It appears that this was a deliberate and co-ordinated efforts when Devang Mody was the CEO of RCFL, Amit Bafana was CFO of RCFL, and Amitabh Jhunjhunwala was vice-president of Reliance Capital Limited.”The offences have been registered at Cuffe Parade police station under sections 409 of the IPC for criminal breach of trust by a public servant, banker, merchant, or agent, section 420 for cheating, section 477 A for falsification of accounts and section 120 B for criminal conspiracy, said the police officer.The Central Bureau of Investigation (CBI) is separately probing a case against the industrialist in connection with an alleged ₹2,220 crore loan fraud case involving Bank of Baroda.