The Supreme Court has directed a thorough investigation into large-scale banking fraud allegedly involving Anil Ambani’s Reliance Group (ADAG), encompassing transactions exceeding ₹22,000 crore. The court was hearing petitions from the State Bank of India (SBI) and other consortium lenders seeking directions for a comprehensive probe.
The core of the issue revolves around allegations that ADAG companies diverted funds obtained as loans from a consortium of banks, potentially using shell companies. The lenders claim these funds were siphoned off and used for purposes other than those stated during loan applications, leading to non-performing assets (NPAs).
The Supreme Court specifically questioned the lack of a robust investigation despite a forensic audit report by BDO India flagging significant irregularities. The report, submitted in 2019, detailed a complex web of transactions and raised concerns about fund diversion. The court noted the audit highlighted a clear case of mismanagement and potential fraud, yet no concrete action was taken by investigative agencies.
The court has directed the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) to register First Information Reports (FIRs) and conduct thorough investigations into the alleged fraud. It emphasized the need to investigate not only the diversion of funds but also the role of bank officials who may have facilitated the irregularities.
The Supreme Court’s order stems from a civil writ petition filed by SBI, seeking a directive for a time-bound investigation. The lenders argue that the alleged fraud has caused substantial financial losses to the banking system.
The court has also appointed a former High Court judge to oversee the investigation and ensure its impartiality and effectiveness. This oversight is intended to prevent any undue influence or delays in the probe. The case highlights concerns about the effectiveness of existing mechanisms for preventing and detecting banking fraud and the need for greater accountability within the financial system. The next hearing is scheduled for January 2024.
