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Markets regulator Securities and Exchange Board of India (Sebi) has barred industrialist Anil Ambani and 24 other entities, including former key officials of Reliance Home Finance from the securities market for five years for diversion of funds from the company.
Sebi has imposed a Rs 25 crore penalty on Ambani and banned him from any association with the securities market, including serving as a director or Key Managerial Personnel (KMP) in any listed company or intermediary registered with the regulator, for a period of five years.
Additionally, the regulator barred Reliance Home Finance from the securities market for six months and fined it Rs 6 lakh.
In its 222-page final order, Sebi revealed that Anil Ambani, along with RHFL's top executives, orchestrated a fraudulent scheme to divert funds from RHFL under the guise of loans to entities connected to him.
Despite the RHFL Board of Directors issuing firm directives to halt such lending practices and regularly reviewing corporate loans, the management disregarded these instructions.
Sebi concluded that the fraudulent scheme was executed by Ambani and the KMPs of RHFL, funnelling funds through credit-unworthy conduit borrowers, all of whom were linked to Ambani himself.
The market regular also said that Anil Ambani leveraged his position as the "chairperson of the ADA group" and his indirect shareholding in RHFL's holding company to execute this scheme.
Sebi noted that loans worth hundreds of crores were approved for companies with little to no assets, cash flow, or revenue, suggesting a deliberate intent behind these loans. Most of these borrowers defaulted, resulting in RHFL's own debt default and its eventual resolution under the RBI Framework. This left public shareholders, including over 9 lakh investors, with significant losses.
RHFL's share price, which stood at Rs 59.60 in March 2018, plummeted to Rs 0.75 by March 2020 as the fraud unravelled.
Sebi imposed penalties on 24 restrained entities, including former RHFL officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, who played key roles in the fraud. Ambani was fined Rs 25 crore, Bapna Rs 27 crore, Sudhalkar Rs 26 crore, and Shah Rs 21 crore.
It also imposed Rs 25 crore fines on several other entities, such as 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.
These entities were either recipients of the siphoned funds or intermediaries in the fraudulent diversion of RHFL's resources.
The ruling comes after Sebi's interim order from February 2022, which had already barred RHFL, Anil Ambani, and three others from the securities market for allegedly siphoning off funds from the company.
