Sebi has also fined Ambani Rs 25 crore and barred him from holding any directorial or key managerial positions in listed companies or market intermediaries for five years. Additionally, Reliance Home Finance Ltd has been suspended from the securities market for six months and fined Rs 6 lakh.
Markets regulator Sebi has imposed a five-year ban on industrialist Anil Ambani and 24 other entities, including former top officials of Reliance Home Finance Ltd (RHFL), from participating in the securities market due to fund diversion from the company.
Sebi has also fined Ambani Rs 25 crore and barred him from holding any directorial or key managerial positions in listed companies or market intermediaries for five years. Additionally, Reliance Home Finance Ltd has been suspended from the securities market for six months and fined Rs 6 lakh.
The regulator’s 222-page final order reveals that Ambani, with assistance from RHFL’s key managerial personnel, orchestrated a fraudulent scheme to divert funds from RHFL by disguising them as loans to entities connected to him.
Despite directives from RHFL’s Board of Directors to halt such practices, the management disregarded these orders, reflecting a significant governance failure influenced by Ambani.
Sebi’s findings indicate that Ambani used his position as chairperson of the ADA Group and his substantial indirect shareholding in RHFL’s holding company to facilitate this fraud. The scheme involved lending large sums to companies with minimal financial stability, many of which were closely tied to RHFL’s promoters.
As these borrowers defaulted on their loans, RHFL struggled with its own debt obligations, leading to its resolution under RBI Framework and significant losses for public shareholders.
In March 2018, RHFL’s share price was around Rs 59.60, but by March 2020, it had plummeted to Rs 0.75 due to the fraud’s exposure. Currently, over 900,000 shareholders are still facing losses.
Currently, over 900,000 shareholders are still invested in Reliance Home Finance Ltd (RHFL) and are facing significant losses.
The 24 entities barred by Sebi include former key officials of RHFL Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, who have been fined for their involvement in the case. Specifically, Sebi has imposed a Rs 25 crore penalty on Ambani, Rs 27 crore on Bapna, Rs 26 crore on Sudhalkar, and Rs 21 crore on Shah.
Other entities, including Reliance Unicorn Enterprises, Reliance Exchange Next Ltd, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd, and Reliance Big Entertainment Pvt Ltd, have each been fined Rs 25 crore. These fines are for either receiving the improperly obtained loans or acting as intermediaries in facilitating the illegal diversion of funds from RHFL.
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Among those restrained are former RHFL officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, each fined significant amounts. Other entities involved, such as Reliance Unicorn Enterprises and Reliance Commercial Finance Ltd, have also been fined Rs 25 crore each for their roles in the scheme.
