ED seizes Reliance Power shares worth ₹2,026.65 crore over FCCB probe
- ED seized Sasan Power shares worth ₹2,026.65 crore and bank balances of ₹6.16 crore
- Action taken under Section 37A(1) of FEMA regarding 2006 FCCB issuance
- Seized shares are already pledged to Power Finance Corporation for over 10 years
- Reliance Power disputes allegations of contravening Section 4 of FEMA
*this image is generated using AI for illustrative purposes only.
Reliance Power Limited disclosed that the Enforcement Directorate (ED) has seized shares of its wholly owned subsidiary, Sasan Power Limited, valued at ₹2,026.65 crore, along with bank balances of ₹6.16 crore. The seizure order, dated October 12, 2026, was issued under Section 37A(1) of the Foreign Exchange Management Act (FEMA).
The regulatory action stems from an investigation into foreign currency convertible bonds (FCCBs) issued by the company in 2006 and a subsequent overseas investment made in 2008 in a Singapore subsidiary. The company stated that these transactions were executed with all applicable approvals at the time.
Nature of the Seizure and Allegations
The ED’s Order of Seizure No.AD/HIU-2(4)(3)/2026/37(A)/01 cites an alleged contravention of Section 4 of the Foreign Exchange Management Act, 1999. The company has disputed these allegations and indicated it will take appropriate legal steps to safeguard the interests of shareholders and stakeholders.
| Particulars | Details |
|---|---|
| Authority | Enforcement Directorate (ED) |
| Date of Receipt | October 12, 2026 |
| Assets Seized | Shares of Sasan Power Ltd; Bank balances |
| Value of Shares | ₹2,026.65 crore |
| Value of Bank Balances | ₹6.16 crore |
| Legal Basis | Section 37A(1) of FEMA |
Status of Pledged Assets
A critical aspect of the disclosure is that the seized shares of Sasan Power Limited are already pledged in favour of Power Finance Corporation Limited, a Government of India undertaking. This security arrangement has been in place for more than 10 years. The seizure imposes a restraint on the transfer, sale, pledge, encumbrance, or other dealing with these assets, although no penalty has been imposed at this stage.
What the Numbers Show
The financial exposure highlighted in this filing reveals a significant divergence between the nominal value of the seized equity and the company's immediate liquidity impact. The shareholding value of ₹2,026.65 crore vastly exceeds the bank balance seizure of ₹6.16 crore. However, since the shares are already pledged to a government undertaking for over a decade, the practical encumbrance on the asset may have existed prior to this specific ED order. The seizure primarily restricts any potential restructuring or disposal of these assets, which were originally linked to overseas investments made nearly two decades ago.
Company Response
Reliance Power stated that the seizure is provisional and subject to confirmation by the Competent Authority under Section 37A of the Act. The company is currently assessing the implications of the order. In its formal communication to stock exchanges, the company affirmed that the information provided was true and correct to the best of its knowledge.
Historical Stock Returns for Reliance Power
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.91% | -0.30% | -7.18% | -20.55% | -58.77% | +17.13% |
How might the seizure of Sasan Power shares impact Reliance Power's ability to restructure its debt or negotiate with lenders given the existing pledge to Power Finance Corporation?
What are the potential legal precedents if Reliance Power successfully challenges the FEMA violation allegations regarding the 2006 FCCBs and 2008 overseas investments in court?
Could this enforcement action trigger broader regulatory scrutiny on other Indian power companies that utilized similar foreign currency convertible bond structures in the mid-2000s?
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