Investigations initiated by the Enforcement Directorate and Central Bureau of Investigation regarding Reliance Mutual Fund's 2,850 Crore investment in YES Bank's AT-1 Bonds.
Investigations led by the Enforcement Directorate (ED) and Central Bureau of Investigation (CBI) are currently underway, delving into the ₹2,850 crore investment made by Reliance Mutual Fund (part of Anil Ambani's group) in YES Bank's Additional Tier-1 (AT-1) bonds. The probe focuses on alleged financial irregularities, fund diversion, and the use of hidden related entities within the Reliance Group.
The ED is actively investigating the investment, which was later written off during YES Bank's bailout, causing losses to investors. Sources suggest the investment may have been made under a quid pro quo arrangement. The AT-1 bonds, which do not have maturity dates and can be converted to equity or written off by the bank during financial distress, were ultimately written off during YES Bank's restructuring.
The ED probe has uncovered alleged diversion of funds exceeding ₹10,000 crore by Reliance Infrastructure through a previously undisclosed related party company dubbed a ‘C Company.’ These funds were reportedly channelled as inter-corporate deposits (ICDs) to other entities within the Reliance Group, bypassing audit and approval processes.
A loan restructuring deal worth ₹5,480 crore involving Reliance Infrastructure is under scrutiny, with only ₹4 crore reportedly recovered in cash, while the rest was routed through now defunct distribution companies (discoms), raising concerns of large-scale financial mismanagement.
The CBI has also initiated its own inquiries into the matter, supporting the ED's investigation, focusing on the broader implications and possible criminal wrongdoing related to these investments and transactions.
Recently, the ED conducted raids at over 35 premises linked to Reliance entities and Anil Ambani, including Reliance Home Finance Ltd., covering many companies and individuals, under the Prevention of Money Laundering Act.
Market watchers remain cautious about the outcome of the case and its potential impact on investor confidence. The ED, with support from the CBI, has found evidence that Reliance Infrastructure used a lesser-known entity, "C Company," to route funds. "C Company," hidden from regulators, played a central role in concealing related-party transactions and bypassing shareholder and audit approvals.
YES Bank approved loans worth ₹3,000 crore to companies under the Reliance Group without proper checks. Bribery of YES Bank officials is also under investigation. The investigations are ongoing as of July 2025, with further details and revelations expected in the near future.
The case may set a landmark precedent for corporate governance in the mutual fund sector due to SEBI's prior-issued penalties against Anil Ambani and others. Shares of Reliance Power and Reliance Infrastructure dropped sharply following the raids.
Both companies stated their operations and financial performance remain unaffected, but the cases involve older entities such as Reliance Communications and Reliance Home Finance. The probe, if proven, could have significant implications for corporate governance and investor trust in the Indian financial sector.
- The ED's ongoing investigation into the investment made by Reliance Mutual Fund in YES Bank's AT-1 bonds is not only focused on alleged financial irregularities and fund diversion, but also on potential quid pro quo arrangements and the use of hidden related entities within the Reliance Group, such as the dubbed 'C Company.'
- The CBI's investigation into the Reliance Group, supporting the ED's probe, extends beyond the investment in YES Bank and encompasses broader implications and possible criminal wrongdoing, including the use of lesser-known entities like 'C Company' to route funds, bypass regulators, and conceal related-party transactions.
