CBI Arrests Former RCFL and RHFL CEOs in Major Bank Fraud Probe

The Central Bureau of Investigation (CBI) has arrested two former top executives of Reliance Group-linked financial institutions as part of an ongoing probe into an alleged multi-crore banking fraud that reportedly caused losses exceeding ₹7,600 crore to several public sector banks.

The agency has taken into custody Devang Mody, former Director and Chief Executive Officer of Reliance Commercial Finance Limited (RCFL), and Ravindra Sudhalkar, former Executive Director and CEO of Reliance Home Finance Limited (RHFL). The arrests relate to separate but interconnected investigations involving alleged irregularities in corporate lending and fund utilization.

Alleged Losses Exceed ₹7,600 Crore

According to investigators, the combined financial impact of the two cases is estimated at approximately ₹7,623 crore.

The RCFL-related investigation concerns alleged losses of around ₹4,097 crore suffered by 13 public sector banks, while the RHFL case involves an estimated ₹3,526 crore loss to 10 state-owned lenders.

Authorities claim that both executives occupied influential leadership positions during the period under scrutiny and were involved in key lending and operational decisions.

Probe Focuses on Loan Sanctions and Regulatory Compliance

CBI investigators allege that large loans were sanctioned to intermediary and conduit entities despite concerns regarding compliance with regulatory requirements and conditions attached to funds borrowed from public sector banks.

The agency is examining whether established due diligence procedures, risk assessments, and lending safeguards were properly followed before approving the transactions.

Devang Mody served as CEO of RCFL between April 2017 and December 2018. Investigators allege that several loans approved during this period may have violated lending norms and regulatory guidelines governing the use of borrowed funds.

Similarly, Ravindra Sudhalkar led RHFL as Executive Director and CEO from October 2016 until March 2022. Authorities are investigating whether lending decisions taken during his tenure complied with regulations issued by financial sector regulators and the institution’s internal policies.

Alleged Diversion of Borrowed Funds Under Scanner

A central aspect of the investigation involves the alleged diversion of funds raised through borrowings from public sector lenders.

According to the CBI, portions of the funds were allegedly routed through intermediary entities and eventually transferred to other associated companies. Investigators are examining whether the transactions were structured to conceal the ultimate destination and use of the money.

Authorities contend that the movement of funds may have resulted in significant losses for lending institutions while providing financial benefits to related entities.

Financial records, corporate transactions, and inter-company fund flows are currently being scrutinized to establish the complete trail of the money.

Multiple Complaints Triggered Investigation

The investigation originated from complaints submitted by several public sector banks along with the Life Insurance Corporation of India (LIC).

Based on these complaints, the CBI registered multiple First Information Reports (FIRs) involving several Reliance Group-linked entities, including Reliance Commercial Finance Limited (RCFL), Reliance Home Finance Limited (RHFL), Reliance Communications Limited (RCom), and Reliance Telecom Limited (RTL).

Investigators are now reviewing loan approvals, related-party transactions, corporate records, and financial documentation to determine whether lending norms were breached and whether funds were used for purposes other than those disclosed to lenders.

Corporate Governance Concerns Emerge

Financial crime analysts describe the case as one of the most significant corporate lending investigations in recent years. The allegations have renewed concerns regarding governance standards, internal controls, regulatory compliance, and post-disbursement monitoring within large financial institutions.

Experts note that one of the key challenges facing lenders is ensuring that funds borrowed through corporate loans are utilized for their intended purposes and are not diverted through complex financial structures.

The case also highlights the importance of stronger risk management systems, enhanced transparency, and more rigorous oversight of high-value lending activities.

Investigation Continues

The CBI has stated that the probe remains active and that further action could follow as investigators continue examining evidence, financial records, and witness statements.

Authorities are also exploring the potential involvement of additional individuals and entities connected to the alleged transactions. As forensic analysis of financial data progresses, investigators expect to gain a clearer understanding of the fund flows and decision-making processes behind the disputed loans.

The outcome of the investigation could have significant implications for corporate lending practices and banking sector accountability in India.