IVRCL loan fraud
Financial fraud in India
- 3 min read
- 4 chapters
Explore on Lably
ToursExplore Lably’s 3D toursBackground
IVRCL Limited (full name: Iragavarapu Venkata Reddy Construction Limited) was an Indian public limited company listed on the National Stock Exchange of India and Bombay Stock Exchange. The company was founded in the late 1980s as an engineering, procurement, and construction contractor. It specialised in large-scale infrastructure projects, including irrigation, water and environment, roads and highways, power transmission, industrial infrastructure, and buildings.
By the mid-2010s, IVRCL had run into serious financial trouble, weighed down by project delays, rising costs, and growing debt—challenges that were common across India's infrastructure sector at the time. The situation worsened to the point that insolvency proceedings were initiated in February 2018. By July 2019, the National Company Law Tribunal in Hyderabad ordered the company's liquidation, handing control from the board to a court-appointed liquidator.
At the time of the alleged fraud probe, the company had significant exposure to a consortium of public sector banks.
Sign in to keep reading
3 more chapters are free with a Lably account.
Allegations
According to the first information report filed Central Bureau of Investigation, on the basis of a complaint by the State Bank of India, IVRCL and its executives allegedly cheated a consortium of banks that included SBI, Canara Bank, IDBI Bank, Punjab & Sind Bank, Andhra Bank, Corporation Bank, Exim Bank of India, and Union Bank of India.
The company was accused of availing various credit facilities (loans and limits) but failing to repay them, causing a loss of ₹4,837 crore to the lenders. A forensic audit report commissioned by SBI reportedly found that IVRCL made payments to related parties through Letters of Credit (LCs) without recording corresponding purchase transactions in its books. Funds were allegedly routed back to the company's accounts, resulting in misappropriation of bank money.
Further allegations, based on investigative reporting citing the probe, claimed that IVRCL floated around 60 shell or related companies and maintained multiple bank accounts (including 75 with SBI alone in some reports) to divert funds, possibly up to ₹7,000 crore (US$730 million) in total routed amounts. Collateral securities pledged to banks were allegedly undervalued in company records.
The modus operandi reportedly involved diverting loan funds to group entities, subcontractors without actual project execution, and falsifying entries to show legitimate use of funds while projects stalled or faced termination risks.
Investigation
On 30 December 2020, the CBI registered the case under relevant sections of the Indian Penal Code for criminal conspiracy, cheating, forgery, and misappropriation of property. CBI teams conducted simultaneous searches at the offices and residential premises of the promoters and executives in Hyderabad, recovering incriminating documents. The Bank Security and Fraud Cell of the CBI led the probe.
Aftermath
The accused named in the FIR include E. Sudhir Reddy (Managing Director), who is now deceased, R. Balarami Reddy (Joint Managing Director), and unknown public servants/others. As of the latest available public information (early 2026), the investigation was ongoing, with no chargesheet filing or court proceedings publicly detailed in major media outlets. The company remained in liquidation, with attempts to sell it as a going concern (including bids in 2021 and later years). A 2025 report noted complications in the liquidation process, including a bidder default, though these issues were separate from the fraud allegations.
IVRCL's listing and operations were effectively suspended due to insolvency and it became the first IBC case to be sold as a going concern.