The Securities and Exchange Board of India (SEBI) has handed down a five-year ban to industrialist Anil Ambani and 24 other entities, including former senior executives of Reliance Home Finance Ltd. (RHFL), over their involvement in a fund diversion scandal.
In its comprehensive 222-page order, SEBI outlined how Anil Ambani and top management at RHFL orchestrated a fraudulent scheme that channeled funds under the guise of loans to entities associated with Ambani.
Key Penalties:
Anil Ambani: Fined ₹25 crore and prohibited from holding positions as a director or Key Managerial Personnel (KMP) in any listed company or SEBI-registered intermediary.
RHFL Management: Despite warnings from the RHFL Board to halt the questionable practices, the management continued to approve loans to financially weak entities, leading to significant repercussions.
Impact on Investors: The fraudulent activities resulted in RHFL defaulting on its debt obligations, triggering a resolution under the RBI framework and affecting over 9 lakh investors. RHFL's stock value plunged from ₹59.60 in March 2018 to just ₹0.75 by March 2020.
Additional Penalties:
RHFL: Banned from the securities market for six months and fined ₹6 lakh.
Key Executives: Former RHFL officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah were fined ₹27 crore, ₹26 crore, and ₹21 crore, respectively.
Involved Entities: Companies like Reliance Unicorn Enterprises and Reliance Exchange Next Ltd. were each fined ₹25 crore for their involvement in the scheme.
This ruling follows an interim order issued in February 2022, which had already restricted RHFL, Ambani, and three others from participating in the securities market due to their alleged roles in the diversion of funds.