State-run IREDA has formally classified loans worth Rs 672.74 crore to Gensol Engineering and its subsidiary as fraudulent. The lender has reported these accounts to the RBI following allegations of fund diversion and document forgery. With 85% of this exposure already provisioned, the focus now turns to recovery proceedings at the Debt Recovery Tribunal and National Company Law Tribunal.
The Indian Renewable Energy Development Agency (IREDA) has officially declared the loan accounts of Gensol Engineering Limited and its subsidiary, Gensol EV Lease Limited, as fraudulent. This development was communicated to the Reserve Bank of India on July 10, 2026, marking a significant step in the lender's efforts to address the issue. The classification stems from allegations of criminal breach of trust, misappropriation of funds, and the submission of falsified documents.
Impact of the Fraud Classification
The total outstanding dues from these accounts amount to Rs 672.74 crore. Specifically, the debt associated with Gensol Engineering is Rs 453.77 crore, while Gensol EV Lease accounts for Rs 218.97 crore. To protect its financial health, IREDA had already provisioned approximately 85% of this total exposure by March 31, 2026. This means the majority of the potential loss was already accounted for in the company’s previous financial statements, limiting the impact of this formal declaration on its current balance sheet.
Origins and Regulatory Oversight
The issues with these loan accounts trace back to funding provided between the 2022 and 2024 fiscal years, intended for the procurement of 6,400 electric vehicles for leasing to the ride-hailing firm BluSmart. Subsequent audits and investigations revealed that only 4,704 vehicles were actually procured, indicating a significant shortfall in the project. This discrepancy, along with other financial irregularities, drew the attention of the Securities and Exchange Board of India (SEBI). SEBI had previously issued an interim order barring the promoters of Gensol, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities market due to allegations of fund diversion and misleading credit rating agencies.
Legal Recourse and Ongoing Recovery
IREDA has been pursuing multiple legal avenues to recover the outstanding funds. These include active proceedings at the Debt Recovery Tribunal in Delhi and an insolvency plea admitted before the National Company Law Tribunal. Power Finance Corporation (PFC), which also participated in the lending, had previously flagged a portion of its exposure to the group as fraud. IREDA’s latest action aligns its internal reporting with these regulatory and legal realities.
Investors and stakeholders will now monitor the progress of these tribunal cases, as the recovery of the remaining 15% of unprovisioned exposure and the resolution of the insolvency proceedings remain the primary focus. The outcome of these legal battles will determine the final impact on IREDA's bottom line and the eventual recovery of public funds.