Shares of Anil Ambani's Reliance companies witnessed a sharp decline on October 13 due to a fake bank guarantee case. Reliance Power's shares fell 10.5% to ₹43.55, and Reliance Infra's shares dropped 4.5% to ₹231. The ED arrested Ashok Kumar Pal, a senior executive of Reliance Power.
Reliance stocks: On Monday, October 13, shares of Anil Ambani's Reliance companies experienced a sudden sharp decline. Reliance Power's shares fell 10.5% to ₹43.55, and Reliance Infra's shares dropped 4.5% to ₹231. This decline followed the arrest of Ashok Kumar Pal, a senior executive of the company, by the Enforcement Directorate (ED) in a case involving fake bank guarantees and bogus billing. Investors suffered losses worth crores, while the investigation focuses on the misuse of loans from 2017-2019.
Fake Bank Guarantee and Arrest
The Enforcement Directorate had arrested Ashok Kumar Pal, a senior executive of Reliance Power, on Saturday in connection with a case of fake bank guarantees and bogus billing. The ED claims that this case is linked to money laundering and financial irregularities. Ashok Kumar Pal has been sent to two-day custody and will be presented in court on Monday. The ED interrogated him for several hours.
The investigation commenced on July 24 when the ED conducted searches at 35 locations, 50 companies, and over 25 individuals associated with the Anil Ambani Group. This action was based on a CBI FIR. The investigation also involves the role of Yes Bank and its then-promoter. The ED suspects that loans worth approximately ₹3,000 crore, taken from Yes Bank between 2017 and 2019, were misused.
Allegations of Bank Fraud
The investigation is based on information received from NHB, SEBI, NFRA, and Bank of Baroda. The ED states that Ashok Pal played a crucial role in submitting fake bank guarantees worth over ₹68 crore to the Solar Energy Corporation of India (SECI). These guarantees were allegedly used to defraud the company and embezzle funds.
The investigation also revealed that a board decision allowed Pal and other officials to prepare documents related to SECI's Battery Energy Storage System bid and leverage Reliance Power's financial strength. Following the unearthing of this case, fear and confusion among investors increased.
Stock Market Decline
The impact of this case was clearly visible in the stock market. On Friday, October 10, Reliance Power's shares had surged 15% to reach ₹50.75. Trading volume on that day was also three times higher than the average. Approximately 7 crore shares were traded, compared to the weekly and monthly average of 2 crore shares.
However, shares experienced a sudden dip on Monday morning. By 10:10 AM, Reliance Power's shares were trading down 5% at ₹46.20, and Reliance Infra's shares were down 2% at ₹238. Investors expressed concern over the sudden losses.
Impact on Investors
This decline in shares proved significant for investors. The sudden fall in Anil Ambani Group shares resulted in losses worth crores. Experts suggest that the ongoing investigation into fake bank guarantees and financial irregularities could erode investor confidence.
