Sebi has placed Gensol's pending stock split on hold and plans to appoint a forensic auditor to review Gensol's accounts, with a report expected within six months.

Gensol had obtained a ₹978 crore term loan from Ireda and PFC, intended for the purchase of 6,400 electric vehicles, but only 4,700 EVs were purchased for ₹567 crore.

When requested for loan statements, Gensol provided letters from Ireda and Power Finance Corporation claiming timely debt servicing, which both lenders denied, citing multiple defaults.

On April 15, 2025, the Securities and Exchange Board of India (Sebi) barred Anmol Singh Jaggi and Puneet Singh Jaggi, promoters of Gensol Engineering, from the securities market due to alleged fund diversion and fraudulent practices.

The allegations against Gensol include violations of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules, indicating a lack of proper governance.

Investigations revealed that funds from sanctioned loans were misappropriated for personal expenses, high-end real estate purchases, and to benefit private entities linked to the promoters.

Sebi's whole-time member, Ashwani Bhatia, stated that there is a blatant violation of corporate governance principles and weak internal controls at Gensol.

The investigation was prompted by complaints and downgrades of Gensol's credit ratings by CARE Ratings and ICRA, linked to debt servicing delays by BluSmart Mobility, a related party.

Approximately ₹262 crore of loans taken by Gensol remain unaccounted for over a year after the last tranche was disbursed.

The number of Gensol shareholders surged from 155 in FY20 to 110,000 by March 2025, while promoter ownership dropped from 70.72% to 35%.

The regulator has mandated Gensol to appoint a forensic auditor to investigate its financial records and those of related parties.

Sebi alleges that Gensol submitted forged documents to mislead regulators, lenders, and credit rating agencies regarding its financial status.