Reliance Power CFO arrest: ED custody extended to Oct 16

What happened and why it matters

A special court extended the Enforcement Directorate’s custody of Ashok Pal, the former chief financial officer (CFO) of Reliance Power, in a money-laundering case linked to an alleged fake bank guarantee of ₹68.2 crore. Pal was arrested on Friday night under the Prevention of Money Laundering Act (PMLA) after questioning by the federal agency. The ED sought additional custodial interrogation, after which the court extended his custody until October 16. The arrest and subsequent court proceedings have put fresh spotlight on governance and compliance issues around bank guarantees used for large infrastructure and renewable tenders. It has also triggered sharp stock reaction, with Reliance Power shares falling more than 10% in Monday trade.

The ED’s case: an alleged fake guarantee for an SECI tender

The case centres on a bank guarantee of ₹68.2 crore submitted to the Solar Energy Corporation of India (SECI) on behalf of Reliance NU BESS Ltd, a subsidiary of Reliance Power. SECI later found the guarantee to be “fake”, as reported by agencies and cited in market reports. The ED has linked the alleged guarantee arrangement to Odisha-based Biswal Tradelink, which it says was involved in issuing fake bank guarantees. The alleged use of a foreign bank guarantee is also part of the investigative narrative. ED sources cited in reports said the guarantee was submitted in the name of “FirstRand Bank, Manila, Philippines”, while also claiming the bank does not have a branch in that country.

Court proceedings and custody details

After Pal’s arrest, a magistrate granted the ED initial custody, and the agency later sought further custodial interrogation. In one set of reports, the court granted two-day ED custody and directed that he be produced again on Monday, October 13. Subsequent updates said a court extended ED custody till October 16 after the agency asked for more time for questioning. Court filings and hearing details referenced a Special Judge, Kiran Gupta, and proceedings at Patiala House Court. Pal’s counsel also challenged the legality of arrest in court, as cited in reports.

Reliance Power’s response and leadership changes

Reliance Power told stock exchanges that Ashok Kumar Pal demitted office as Executive Director and CFO with immediate effect. The company said a “third party” arranged the bank guarantee from a foreign bank, and that Reliance Power and its subsidiaries acted in a bona fide manner. In its filings, the company stated it was “a victim of fraud, forgery and cheating conspiracy.” Reliance Power also appointed its chief executive, Neeraj Parakh, to the additional position of interim CFO. In another exchange filing referenced in reports, the company also submitted Pal’s response, where he said he was the original complainant in the related FIR and resigned due to the pendency of the investigation.

Stock market reaction: Reliance Power slides

Shares of Reliance Power fell more than 10% on Monday to ₹43.55, described in reports as the lowest level in over a month. The decline followed disclosures that Pal had been arrested by the ED under PMLA in the alleged fake bank guarantee case. The stock move underscores how leadership exits, enforcement action, and ongoing probes can quickly change near-term sentiment for listed companies. Reliance Power’s exchange disclosures around Pal’s resignation and interim CFO appointment became key reference points for investors tracking developments.

The wider probe: Biswal Tradelink, searches, and earlier arrests

The ED has identified Odisha-based Biswal Tradelink as the accused company allegedly running a racket for issuing fake bank guarantees. As part of the investigation, the ED conducted searches in August at premises linked to the firm and its promoters. The agency arrested Partha Sarathi Biswal, managing director of Biswal Tradelink, during this phase. Reports also said the subsidiary had sought the guarantee for participation in an SECI tender, and that the alleged racket involved issuing such instruments to business groups.

Origins of the case: Delhi Police EOW FIR and alleged commission

The money-laundering probe stems from an FIR registered by Delhi Police’s Economic Offences Wing (EOW), dated November 11, 2024 (FIR No. 131/2024, as cited in exchange-linked reporting). The FIR alleged issuance of bogus bank guarantees for a commission of 8%. Reliance Group disclosures referenced that a criminal complaint was filed with the EOW in October 2024 against the third party, and that the matter was disclosed to stock exchanges on November 7, 2024. ED reporting also flagged alleged spoofing tactics, including use of an email domain “s-bi.co.in” similar to SBI’s official “sbi.co.in” to create the appearance of bank-authenticated communication.

Clarification on Anil Ambani and group-level scrutiny

Reliance Power clarified in exchange filings that Anil D. Ambani has not been on the company’s board for more than three years (and separately stated as more than three and a half years in some reports) and is not connected to the matter. Separately, reports noted that Anil Ambani, certain current and past senior executives of group companies, and several bank officials are under investigation in connection with an alleged ₹17,000 crore loan fraud case. The bank guarantee probe and the broader loan-fraud investigation are referenced as parallel enforcement scrutiny points in reporting, though the specifics differ across cases.

Key facts at a glance

Market impact and why investors are tracking the case

For investors, the immediate impact has been visible in price action, with the stock sliding to ₹43.55 amid heavy selling after the arrest news. The episode also raises questions around internal controls for external instruments such as bank guarantees used in tender participation, especially where third parties are involved. Reliance Power’s position is that it acted in good faith and is a victim, but the enforcement process can still weigh on sentiment until there is greater clarity from the investigation and courts. The interim CFO appointment is a continuity step, but markets typically respond to the uncertainty created by senior management exits linked to enforcement actions.

Conclusion

The ED’s arrest of Reliance Power’s former CFO Ashok Pal in the ₹68.2-crore alleged fake bank guarantee case has moved into a new phase, with the court extending custodial interrogation till October 16. Reliance Power has maintained it is a victim of fraud and forgery, while restructuring finance leadership by naming CEO Neeraj Parakh as interim CFO. The next key milestone for markets will be further court proceedings and any additional disclosures as the investigation progresses.