SEBI Bans Anil Ambani, 24 Other Entities From Securities Market For 5 Years

SEBI, or the Securities and Exchange Board of India, the regulatory body for securities and commodity markets in India,  has banned industrialist Anil Ambani, and 24 other entities, including former officials of Reliance Home Finance Ltd (RHFL) from the securities market for 5 years for diversion of funds. SEBI has also imposed a fine of Rs 25 cr on Anil Ambani, the younger brother of Mukesh Ambani, the chairman of Reliance Industries Limited.

SEBI found that Anil Ambani orchestrated a fallacious scheme with the help of RHFL’s major managerial personnel, to siphon funds from the entity by masking it as loans to entities linked to him, as per SEBI’s 222-page final order. However, these orders were refused by RHFL as the board stated that the Director’s Board had issued strong directives to halt such default practices and review corporate lon dealings every day.

Also, read| Reliance-Disney $8.5B Merger Raises Concerns Over Competition: CCI

The order suggests that a significant failure or ignorance has come to the notice ditching proper governance under the influence of Anil Ambani. It also stated that the RHFL should not priorly hold the encumbrance rather the other majors or individuals are also involved in the fraud and shouldn’t disregard the order since they stood as recipients of loans obtained through illegal practices.

The regulatory body noted that the “existence of a fraudulent scheme, orchestrated by Notice 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 are ‘promoter linked entities’ i.e. entities associated/ linked with Noticee 2 (Anil Ambani)”. SEBI has imposed whopping fines on RHFL’s former officials, 27 crore on Amit Bapna, 26 crore on Ravindra Sudhalkar and Rs 21 crore on Pinkesh R Shah, along with 25 crore on Anil Ambani.

As per the order, Anil Ambani utilised his position to direct this fraudulent scheme within the designation as chairperson of the ADA group through his indirect shareholding. The regulatory body tSEBI noted this imprudent heedless approach of the company management that they approved loans worth hefty amounts for the companies with no revenue, tangible assets, revenue or net worth.

Also, read| Big Penalty On KPMG-Affiliate BSR & Associates: Why Audit Firms Are Concerned

This has been taken as a significant point that the fraudulent objective has been linked to the borrowers’ names as they are very close to the company or once designated as the promoters of RHFL.  These borrowers failed to repay the loans eventually, and this led RHFL to default on the debt obligations leaving the public shareholders standing under the sun. It was said that at least 9 lakh shareholders have been invested in RHFL and are now confronting significant financial losses.