The Directorate of Enforcement (ED) has recorded detailed “reasons to believe” for the arrest of Mr. Amitabh Jhunjhunwala under Section 19 of the Prevention of Money Laundering Act, 2002, in connection with an alleged large-scale diversion and siphoning of public funds involving Reliance Home Finance Limited (RHFL) and Reliance Commercial Finance Limited (RCFL).
The case originates from multiple FIRs registered by the CBI and Economic Offences Wing (EOW), alleging serious financial irregularities, including cheating, criminal conspiracy, and corruption in the sanction and disbursal of loans. The ED investigation is based on these predicate offences and focuses on tracing the proceeds of crime generated through alleged fraudulent lending practices.
According to the investigation, between 2016 and 2019, RHFL and RCFL sanctioned loans amounting to thousands of crores, a significant portion of which was routed through a network of shell or paper companies. These entities, many of which had weak financials and no substantial business operations, were allegedly used as conduits to divert funds to other group companies. The ED has pointed out that such transactions involved round-tripping, layering, and misrepresentation of financial data, indicating a deliberate attempt to disguise the origin and movement of funds.
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The findings reveal that corporate loans were often sanctioned without proper due diligence, collateral, or adherence to standard credit appraisal norms. In several instances, loan disbursals were made even before completion of documentation, and internal approvals were allegedly influenced by top management instructions. The forensic audit cited in the document highlights systematic diversion of funds, regulatory violations, and misuse of corporate lending structures.
A key allegation is that nearly 90% of certain corporate loan portfolios during the financial year 2018–19 were diverted to shell entities linked to the broader group structure. The funds were subsequently routed back to group companies through complex financial arrangements, including inter-corporate deposits and layered transactions, ultimately resulting in significant loan defaults and classification of accounts as non-performing assets (NPAs).
The ED has also relied on electronic evidence, including emails and internal communications, to establish decision-making authority and involvement. These communications allegedly show that Mr. Amitabh Jhunjhunwala played a central role in approving loan disbursals, monitoring fund flows, and directing financial transactions within the group structure. Statements recorded under the PMLA from key officials further corroborate the allegations of centralized control and coordinated diversion of funds.
The investigation notes that lenders and financial institutions suffered substantial losses, with only partial recovery achieved through resolution processes. A large portion of the outstanding debt remains unpaid, forming the basis of the alleged proceeds of crime.
Based on the material gathered, the ED has concluded that there exists sufficient evidence indicating that the accused was knowingly involved in the process and activity connected with proceeds of crime, including their concealment, possession, and use. The agency has justified the arrest on grounds such as the need to prevent tampering with evidence, influence over witnesses, and the risk of the accused leaving the country.
