The Enforcement Directorate (ED) has marked more than ₹11,600 crore as “proceeds of crime” in its ongoing money laundering investigation involving Reliance Home Finance Limited (RHFL) and Reliance Commercial Finance Limited (RCFL), signaling one of the most significant corporate lending irregularity cases under probe in India.
The investigation points to alleged large-scale diversion of public funds through complex financial structures and shell entities, with scrutiny now entering a critical stage.
According to documents submitted before a special court in Delhi, the ED has classified ₹5,407.18 crore linked to RHFL and ₹6,280.47 crore linked to RCFL as suspicious financial flows. The agency alleges that these amounts are connected to unpaid loans, partial recoveries, and widespread fund diversion. Investigators further claim that nearly 90% of corporate loans were routed through shell companies and questionable entities.
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Shell Companies Under Scanner
The agency has stated that funds were disbursed through 98 loan accounts involving approximately 45 companies, many of which reportedly lacked genuine business operations or financial substance. The ED has alleged that standard lending protocols were bypassed, credit appraisal mechanisms were weakened or ignored, and due diligence procedures were not properly followed in several cases.
In the RHFL matter, the agency noted that the company received ₹35,368.97 crore between 2015 and 2020, while its financial statements for 2018–19 reflected liabilities of ₹12,728.89 crore. Investigators also claim that nearly 80% of the disbursed loans were used for purposes other than housing, raising concerns over deviation from the company’s stated lending objectives.
Following defaults, lenders entered into an inter-creditor agreement in 2019 under Reserve Bank of India (RBI) guidelines. Despite exposure from 33 banks, recoveries have remained limited. The ED maintains that even after restructuring efforts, a significant portion of the allegedly diverted funds has not been recovered, prompting deeper forensic examination.
RCFL Funds Also Examined
In the RCFL case, the agency found that the company raised approximately ₹1.13 lakh crore between FY16 and FY21, while its debt stood at ₹10,518.5 crore in FY19. After default, lenders led by Bank of Baroda initiated a resolution process, and the company was later acquired by Authum Investment and Infrastructure Ltd. However, the ED alleges that around 83% of the funds were routed through 36 shell companies across 78 loan accounts.
Investigators further claim that certain senior officials exercised significant control over fund flow decisions, credit approvals, and loan disbursement processes. The ED has relied on electronic records and statements to allege that funds were systematically routed through “paper companies” to obscure the actual beneficiaries.
Court Sees Case as Early Stage
The court, while granting custody of the accused, observed that the case is still at a preliminary stage and that the exact role of each individual remains to be determined. It also emphasized the need for a detailed examination of the complete money trail to identify beneficiaries and assess the total extent of alleged diversion and financial loss.
The ED argued before the court that the accused held influential positions and could potentially influence witnesses or interfere with the investigation, making custodial interrogation necessary.
Financial crime experts note that cases involving large-scale corporate lending fraud typically rely on shell company networks, layered transactions, and multi-level fund routing, which make both investigation and recovery highly complex and time-consuming. The case has once again highlighted systemic weaknesses in corporate lending oversight, governance frameworks, and regulatory monitoring.
The investigation into RHFL and RCFL remains ongoing, with agencies continuing to trace the full fund trail, identify beneficiaries, and determine the overall financial impact on lending institutions and public funds.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
