India's markets regulator 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 £2.5 mn penalty on Ambani and banned him from any association with the securities market. Additionally, the regulator barred Reliance Home Finance from the securities market for six months and fined it Rs 600,000.
In its order, Sebi revealed that Ambani and 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, 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.
Sebi noted that loans worth millions were approved for companies with little to no assets. 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 900,000 investors, with significant losses. Sebi imposed penalties on 24 restrained entities, including former RHFL officials Amit Bapna,
It also imposed 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.
Ambani reviews legal options
Meanwhile, Ambani, who has been banned by Sebi from accessing the securities market for five years on fund diversion charges, is reviewing legal options, his spokesperson said. In a statement, the spokesperson said that Ambani is reviewing the order and will take appropriate steps as legally advised. Reliance Home Finance is now a part of Authum Investment and Infrastructure, owned by market operator Sanjay Dangi. Ambani can appeal against the Sebi order before the Securities Appellate Tribunal (SAT), according to the legal redressal process.
