State-run Indian Renewable Energy Development Agency (IREDA) has classified the loan accounts of Gensol Engineering Ltd and its subsidiary Gensol EV Lease Ltd as fraud and reported the matter to the Reserve Bank of India (RBI) on Friday (July 10). According to reports from ET Now, the action has been taken under the RBI's Master Direction on Fraud Risk Management in Non-Banking Financial Companies (NBFCs), 2024, and has been disclosed to stock exchanges under SEBI's listing regulations. The classification is based on alleged misappropriation and criminal breach of trust and forgery with the intent to commit fraud by making false documents and/or electronic records. The formal fraud tag represents the culmination of a process that has been building for over a year, drawing a formal line under an episode that has been closely watched across India's renewable energy financing sector.
The outstanding exposure in the fraudulent accounts stands at ₹672.74 crore in total, with Gensol Engineering accounting for ₹453.77 crore and Gensol EV Lease contributing ₹218.97 crore. As reported by ET Now, IREDA has maintained 85% provisioning against both accounts as of March 31, 2026. The subsidiary Gensol EV Lease has also been classified as fraud for alleged misappropriation and criminal breach of trust, with the same 85% provisioning coverage. The lender has already made provisions equivalent to 85% of the outstanding amount in both accounts as of March 31, 2026. For IREDA, the practical financial impact is limited at this stage since the account was already downgraded and heavily provisioned for.
Following the fraud declaration, Gensol Engineering has filed its clarification before stock exchanges acknowledging the classification. According to Business Standard, the company stated that "The contents of the said reports are factually correct and are based on the aforesaid order issued by IREDA." This official response from the company provides clarity to investors and stakeholders about the authenticity of the fraud declaration. The company's acknowledgment of the factual accuracy of the reports demonstrates transparency in addressing the regulatory developments.
The fraud declaration stems from a significant vehicle procurement dispute involving BluSmart, whose operations were disrupted by the fallout. According to ET Now, IREDA and co-lender Power Finance Corporation (PFC) had jointly extended loans to Gensol between FY22 and FY24 to fund the purchase of 6,400 electric vehicles meant for leasing to ride-hailing platform BluSmart. However, only 4,704 vehicles were actually procured, leaving a significant gap in funds that the Securities and Exchange Board of India later flagged in an interim order against Gensol's promoters, Anmol Singh Jaggi and Puneet Singh Jaggi. Both promoters were barred from the securities market over allegations of fund diversion and the use of falsified documents to mislead credit rating agencies about the status of loan repayments.
The fraud declaration follows earlier disclosures by IREDA relating to the borrowers. In April 2025, the Securities and Exchange Board of India (SEBI) issued an interim order alleging diversion of company funds, falsification of documents submitted to lenders and serious corporate governance lapses. The market regulator barred promoters Anmol Singh Jaggi and Puneet Singh Jaggi from holding key managerial positions in the company and from accessing the securities market. SEBI's investigation was triggered after credit rating agencies CARE Ratings and ICRA downgraded Gensol's debt to default grade in March 2025, citing delays in debt servicing and concerns that documents regarding the company's repayment record had apparently been falsified.
Separately, IREDA has initiated recovery proceedings against the Gensol entities before the Debt Recovery Tribunal and has also filed insolvency proceedings against Gensol Engineering to recover its dues. The regulator subsequently found prima facie evidence that conduct letters purportedly issued by IREDA and Power Finance Corporation (PFC) had been forged. PFC, for its part, had earlier classified a portion of its own exposure to the group as fraud. With this latest declaration, IREDA brings its own books in line with that trajectory, closing out what had previously been described in its FY26 results as a "suspected fraud under investigation." Investors and sector analysts will be watching how much of the ₹672.74 crore IREDA is ultimately able to recover, while BluSmart remains shut and recovery proceedings continue through the insolvency and debt recovery process.
