Markets regulator Securities and Exchange Board of India (Sebi) has imposed a five-year ban on industrialist Anil Ambani and 24 other entities from the securities market for diverting funds from Reliance Home Finance. Ambani has also been fined Rs 25 crore and restrained from being associated with any listed company or intermediary registered with Sebi.
Here are the top 10 highlights from the news story:
In its 222-page final order, Sebi found that Anil Ambani, with the help of Reliance Home Finance's key managerial personnel, had orchestrated a fraudulent scheme to siphon off funds from the company by disguising them as loans to entities linked to him.
The regulator imposed a penalty of Rs 25 crore on Ambani and restrained him from the securities market for five years, including being a director or Key Managerial Personnel (KMP) in any listed company or intermediary registered with Sebi.
The regulator barred Reliance Home Finance from the securities market for six months and slapped a fine of Rs 6 lakh on it.
Sebi noted a significant failure of governance driven by key managerial personnel under Ambani's influence, despite the company's Board of Directors issuing strong directives to stop such lending practices.
The regulator also found that Ambani used his position as chairperson of the Anil Dhirubhai Ambani (ADA) Group and his significant indirect shareholding in the holding company of Reliance Home Finance to orchestrate the fraud.
Sebi said its findings have established the "existence of a fraudulent scheme, orchestrated by Noticee No. 2 (Anil Ambani) and administered by the KMPs of RHFL, to siphon off funds from the public listed company (RHFL) by structuring them as 'loans' to credit unworthy conduit borrowers, and in turn, to onward borrowers, all of whom have been found to be 'promoter linked entities' i.e. entities associated/ linked with Noticee 2 (Anil Ambani)".
The regulator also noted a cavalier approach by the company's management and promoter in approving loans worth hundreds of crores to companies with little to no assets, cash flow, net worth, or revenue.
Most of these borrowers failed to repay their loans, causing Reliance Home Finance to default on its own debt obligations, leading to the company's resolution under the RBI Framework and significant losses for public shareholders.
The 24 restrained entities include former key officials of Reliance Home Finance - Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah - who were also fined for their role in the case.
Additional fines were levied on 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 Private Ltd, for either receiving illegally obtained loans or acting as intermediaries to facilitate the illegal diversion of funds.
