Reliance Power Shares Fall 5% to ₹56.78 After ED Raids

Reliance Power Shares Fall 5% to ₹56.78 After ED Raids

Reliance Power shares slipped 5% to ₹56.78 today following ED raids probing ₹3,000 Cr money-laundering. Company asserts no operational impact.

Reliance Power Shares Plunge 5% Amidst ED Raids on Anil Ambani Group

Shares of Reliance Power Ltd witnessed a significant downturn on Thursday, July 24, 2025, plunging by 5% to hit the lower circuit limit at ₹56.78 on the stock exchanges. This sharp decline comes in the wake of widespread raids conducted by the Enforcement Directorate (ED) across multiple premises linked to industrialist Anil Ambani's group companies. The raids are part of an ongoing money-laundering investigation centered on an alleged ₹3,000 crore bank loan fraud involving Yes Bank. While the probe primarily targets other entities within the broader Reliance Group, the news has cast a shadow over all listed companies associated with the conglomerate, triggering immediate investor concerns.

The Enforcement Directorate's coordinated search operations, spanning over 35 locations in Mumbai and Delhi, have intensified the scrutiny on the financial dealings of the Anil Ambani Group. This development has sent ripples through the market, with investors reacting swiftly to the unfolding investigation. Despite Reliance Power's prompt clarification asserting that the raids have no impact on its business operations, the market's initial response reflects a broader apprehension surrounding the group's legal challenges. This report delves into the details of the ED probe, the immediate market reaction, and the company's stance on the matter.

The ED Probe: Allegations of ₹3,000 Crore Money Laundering

The Enforcement Directorate's extensive search operation on July 24, 2025, is a significant escalation in an ongoing money-laundering investigation. The probe stems from two First Information Reports (FIRs) registered by the Central Bureau of Investigation (CBI) and is being conducted under the stringent provisions of the Prevention of Money Laundering Act (PMLA). At the heart of the investigation are allegations of an illegal diversion of approximately ₹3,000 crore in loans disbursed by Yes Bank to various entities within the Anil Ambani-led Reliance Group between 2017 and 2019.

According to ED sources, preliminary investigations have uncovered what is described as a "well-planned scheme" to siphon off public money by defrauding banks, shareholders, and other public institutions. The agency suspects a "quid pro quo" arrangement, alleging that promoters of Yes Bank received funds in their privately held concerns just prior to the loan disbursements to the Anil Ambani Group companies. This suspected nexus of bribery and loan disbursal is a key focus of the ED's inquiry.

Furthermore, investigators are examining alleged gross violations in Yes Bank's loan approval processes. These irregularities reportedly include instances of backdated Credit Approval Memorandums (CAMs), proposals for investments made without proper due diligence or credit analysis, and breaches of the bank's internal credit policies. The loans were allegedly diverted to multiple group entities and shell companies, often without proper documentation, and in some cases, funds were reportedly disbursed on the same day as loan applications were made. The ED's investigation is also being supported by inputs and findings from various other regulatory bodies, including the National Housing Bank (NHB), the Securities and Exchange Board of India (SEBI), and the National Financial Reporting Authority (NFRA), as well as information from the Bank of Baroda.

Reliance Power's Clarification: Distancing from the Allegations

In response to the media reports and the market reaction, Reliance Power Limited promptly issued a clarification letter to the stock exchanges. The company sought to distance itself from the ongoing ED probe, asserting that the actions "have absolutely no impact on the business operations, financial performance, shareholders, employees, or any other stakeholders of Reliance Power."

The clarification emphasized that the media reports appear to pertain to allegations concerning transactions of Reliance Communications Limited (RCOM) or Reliance Home Finance Limited (RHFL), which are stated to be over 10 years old. Reliance Power explicitly clarified that it is a "separate and independent listed entity with no business or financial linkage to RCOM or RHFL." It highlighted that RCOM has been undergoing a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016, for over six years, and RHFL has been fully resolved pursuant to a judgment by the Hon'ble Supreme Court of India.

Crucially, Reliance Power also stated that Anil D. Ambani is not on the Board of Reliance Power. Therefore, the company argued, any action taken against RCOM or RHFL has "no bearing or impact on the governance, management, or operations of Reliance Power." The company reiterated its commitment to focusing on its business plans and creating value for all stakeholders, undeterred by these external developments. Reliance Infrastructure issued a similar statement, emphasizing its independent status.

Immediate Market Reaction: Shares Hit Lower Circuit

The news of the ED raids triggered an immediate and sharp reaction in the stock market. Shares of Reliance Power Ltd plunged by 5% in early trade on Thursday, July 24, 2025, hitting its lower circuit limit at ₹56.78 on the BSE. This means that trading in the stock was temporarily halted due to the significant price drop. Similarly, Reliance Infrastructure Ltd, another listed entity associated with the Anil Ambani Group, also hit its 5% lower circuit limit, reflecting the broader impact of the news on the group's publicly traded companies.

The rapid sell-off underscores the market's sensitivity to regulatory probes, especially those involving allegations of financial irregularities and money laundering. Despite the clarifications issued by both Reliance Power and Reliance Infrastructure, investors opted for caution, leading to the circuit-breaker being triggered. The volume of shares traded for Reliance Power was notably high, indicating significant selling pressure as investors reacted to the uncertainty created by the ED's actions. The market will now keenly watch for further developments in the investigation and any subsequent impact on the group's financial stability.

Background and Historical Context of the Probe

The current ED investigation is not an isolated incident but rather part of a series of probes and regulatory actions that have impacted entities associated with the Anil Ambani Group over recent years. The alleged ₹3,000 crore loan fraud is specifically linked to loans disbursed by Yes Bank between 2017 and 2019. This period coincides with a challenging financial phase for several Anil Ambani-led companies, some of which have since entered insolvency proceedings.

It is important to note that the State Bank of India (SBI) had independently classified Reliance Communications (RCOM), along with its promoter director Anil D. Ambani, as 'fraud' on June 13, 2025, in accordance with RBI's guidelines on fraud risk management. This classification was also reported to the RBI, and SBI is in the process of lodging a complaint with the CBI. This earlier development, preceding the ED raids, had already brought increased scrutiny on the group's financial health and governance practices.

The ED's current investigation is delving into alleged procedural violations, such as backdated credit approval memorandums and investments made without due diligence, which reportedly violated Yes Bank's internal credit policies. The agency is also examining how loans were allegedly diverted to various group companies and shell entities, often lacking proper documentation. These findings suggest a systematic approach to misappropriate public funds through defrauding banks, shareholders, and investors. The complexity of the alleged transactions and the involvement of multiple entities highlight the scale of the investigation.

Implications for Investors and the Power Sector Stocks

The ED raids and the subsequent fall in Reliance Power shares have significant implications for investors, particularly those holding stocks within the Anil Ambani Group. While Reliance Power has asserted its independence from the entities under direct investigation, the market's reaction demonstrates that any negative news surrounding the broader group can impact its listed companies. Investors often view such regulatory actions as a heightened risk, leading to a sell-off regardless of direct operational linkages.

For the broader power sector stocks, this incident might introduce a degree of caution, though the impact is likely to be localized to companies directly or indirectly associated with the ongoing probe. The focus will remain on the legal proceedings and any further revelations from the ED's investigation. Until more clarity emerges and the legal processes unfold, investor sentiment towards Reliance Power and other ADAG stocks may remain subdued, characterized by volatility and a cautious approach. The long-term impact will depend on the outcome of the investigation and whether any direct implications for Reliance Power's operations or financials are established.

Conclusion: An Ongoing Saga of Scrutiny

The 5% fall in Reliance Power shares to ₹56.78 today, following the Enforcement Directorate's raids on entities linked to the Anil Ambani Group, underscores the market's immediate and sensitive reaction to regulatory actions. While Reliance Power has swiftly clarified that the probe primarily concerns other group companies (RCOM and RHFL) and has no bearing on its own operations or financial performance, the broader market sentiment remains cautious. The alleged ₹3,000 crore money-laundering case involving Yes Bank loans adds another layer of complexity to the ongoing legal challenges faced by the Anil Ambani Group. As the ED's comprehensive investigation continues, investors will be closely monitoring developments, seeking clarity on the potential long-term implications for Reliance Power and other associated entities in the Indian market.