The Securities and Exchange Board of India (SEBI) has delivered a sweeping 222-page order that sheds light on the extensive fraudulent activities orchestrated by Anil Ambani and senior executives of Reliance Home Finance Ltd. (RHFL). This order marks a significant regulatory response to the alleged fund diversion scheme that involved masking financial misconduct as legitimate loans to entities connected to Ambani.
SEBI's sanctions are substantial. Anil Ambani faces a five-year ban from participating in the securities market. Additionally, he has been fined ₹25 crore and is prohibited from holding any directorial or Key Managerial Personnel (KMP) roles in listed companies or intermediaries regulated by SEBI. This move aims to prevent Ambani from engaging in any further activities that could impact investor confidence or market integrity.
The order details a sophisticated scheme in which Ambani and senior RHFL executives diverted funds by disguising them as loans to entities with direct links to Ambani. Despite clear directives from the RHFL Board to halt these practices, the management persisted in approving loans to financially unstable entities. This continued disregard for governance led to significant financial repercussions for the company and its stakeholders.
The fallout from this scandal has been severe. RHFL's financial instability led to its debt default and subsequent resolution under the Reserve Bank of India (RBI) framework. The impact on investors has been substantial, with over 9 lakh individuals affected. The company's share price experienced a dramatic decline, plummeting from ₹59.60 in March 2018 to a mere ₹0.75 by March 2020.
In addition to Ambani's individual penalties, RHFL has been barred from the securities market for six months and fined ₹6 lakh. Key figures within the company, including former officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, have been subject to significant fines, totaling ₹27 crore, ₹26 crore, and ₹21 crore, respectively.
Entities implicated in the fraudulent scheme, such as Reliance Unicorn Enterprises and Reliance Exchange Next Ltd., have each been fined ₹25 crore. This action follows an interim order issued in February 2022, which had already restricted RHFL, Ambani, and three other individuals from participating in the securities market due to their involvement in the scheme.Â
SEBI's comprehensive order underscores the seriousness with which it is addressing financial misconduct and its commitment to enforcing regulations to protect investors and maintain market integrity.
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