Arrests in Major Loan Diversion Case
The former Chief Executive Officers of Reliance Commercial Finance Limited (RCFL) and Reliance Home Finance Limited (RHFL) have been arrested for allegedly diverting loans totaling Rs 7,623 crore. The arrests were made by the Economic Offences Wing of the Mumbai Police on Tuesday, following a lengthy investigation into financial irregularities at the two companies.
Details of the Arrested Individuals
The accused have been identified as Devang Mody, who served as CEO of RCFL from April 2017 to December 2018, and Ravindra Sudhalkar, who was Executive Director and CEO of RHFL between October 2016 and March 2022. According to police sources, both individuals are accused of colluding to sanction loans to ineligible entities, resulting in the diversion of funds.
Nature of the Fraud
Investigators allege that the loans were sanctioned to shell companies and entities with no genuine business operations, often without proper collateral or due diligence. The diverted funds were then channeled to related parties, causing substantial losses to the lenders. The modus operandi involved the creation of fake loan accounts and the manipulation of financial records to mask the irregularities.
Impact and Legal Proceedings
The fraud came to light after a forensic audit ordered by the lenders revealed discrepancies in loan disbursements. The total amount involved is Rs 7,623 crore, making it one of the largest loan diversion cases in recent years. Both Mody and Sudhalkar have been remanded to police custody until June 29 for further interrogation. The police are also investigating the role of other officials and intermediaries who may have facilitated the fraud.
Background of the Companies
RCFL and RHFL are part of the Reliance Group, which is separate from the Reliance Industries conglomerate. The companies were engaged in lending to small and medium enterprises and the housing sector respectively. The financial troubles of these firms had earlier led to regulatory scrutiny and a sharp decline in their stock prices.
