The Enforcement Directorate (ED) has intensified its scrutiny of Reliance Infrastructure Ltd., a company owned by Anil Ambani's Reliance ADA Group, as part of an ongoing investigation into alleged violations of the Foreign Exchange Management Act (FEMA). In a significant development, the agency has identified assets worth Rs 2,000.00 crore linked to the company, with plans to initiate the asset attachment process within the next two weeks.

Investigation Details

The probe has expanded following ED searches at six locations across Mumbai and Indore connected to Reliance Infrastructure. The focus of the investigation centers on the alleged diversion of funds amounting to Rs 17,000.00 crore across multiple companies within the Anil Dhirubhai Ambani Group (ADAG).

Banking Sector Involvement

The ED's investigation has drawn inputs from 30 banks regarding potential lapses in lending practices. Additionally, the agency has reviewed a Central Bureau of Investigation (CBI) chargesheet that alleges quid pro quo arrangements between Yes Bank and ADAG firms.

Key Developments

1. Asset Identification: ED has identified Rs 2,000.00 crore worth of assets linked to Reliance Infrastructure.
2. Imminent Action: Asset attachment process expected to commence within two weeks.
3. Widespread Investigation: Searches conducted at six locations in Mumbai and Indore.
4. Fund Diversion Allegations: Probe focuses on alleged diversion of Rs 17,000.00 crore across ADAG companies.
5. Banking Sector Scrutiny: Inputs received from 30 banks on potential lending practice lapses.
6. Related Arrests: Reliance Power CFO Ashok Kumar Pal arrested in connection with a fake bank guarantee scheme.
7. High-Profile Questioning: Anil Ambani appeared before ED as part of a Prevention of Money Laundering Act probe.

This ongoing investigation highlights the increasing regulatory scrutiny on corporate financial practices and cross-company fund movements within large business groups in India. As the probe unfolds, it may have significant implications for Reliance Infrastructure and the broader Reliance ADA Group.

The Securities and Exchange Board of India (SEBI) has issued show cause notices to Reliance Power Ltd. and Reliance Infrastructure Ltd. , both part of the Anil Ambani group, for alleged violations of fraudulent and unfair trade practices regulations. This development comes in the wake of ongoing scrutiny of the group's financial dealings.

Key Points of the SEBI Notice

• The notices pertain to Reliance Infrastructure's exposure in CLE Private Limited.
• Reliance Infrastructure has stated that the dispute with CLE was settled through mediation conducted by a retired Supreme Court judge.
• A settlement agreement of Rs 6,503.00 crore was reached in February.

Recent Developments and Market Reaction

• The Enforcement Directorate conducted raids on over 35 premises and searched more than 50 companies linked to the Reliance Anil Ambani Group.
• The raids were related to allegations of illegal loan diversion.
• Reliance Infrastructure has denied fund diversion allegations, stating it had a net exposure of Rs 6,500.00 crore, which was disclosed in financial statements over four years.
• The market reacted negatively to the news, with shares of both companies declining:

• In contrast, the BSE Sensex gained 0.70% on the same day.

Reliance Infrastructure's Response

According to the latest LODR (Listing Obligations and Disclosure Requirements) data filed by Reliance Infrastructure:

• The company acknowledged receiving a Show Cause Notice from SEBI for alleged violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003, read with the SEBI Act, 1992.
• Reliance Infrastructure emphasized that the settlement with CLE Private Limited has been concluded and fully implemented under the Mediation Act, 2023.
• The company stated it would take appropriate legal steps in response to the notice.

Implications and Next Steps

The issuance of show cause notices by SEBI marks a significant development in the ongoing scrutiny of the Anil Ambani group companies. While Reliance Infrastructure maintains that the dispute with CLE Private Limited has been settled, the regulatory action suggests that SEBI may have concerns about the nature of the transactions or disclosures made.

As the situation unfolds, investors and market watchers will be keenly observing how these companies respond to the regulatory challenges and what impact this might have on their financial standing and market perception.

The companies now face the task of addressing SEBI's concerns while managing investor confidence in an already challenging market environment for the group.