SEBI has barred Reliance ADAG Chairman and MD Anil Ambani and 24 other entities, including former officials from Reliance Home Finance (RHFL), from the securities market for five years due to the diversion of funds from RHFL, according to the market regulator’s latest order. While RHFL has been suspended from the market for six months and fined ₹6 lakh, the financial penalty has been imposed on former RHFL officials such as Amit Bapna (₹27 crore), Ravindra Sudhalkar (₹26 crore), and Pinkesh R. Shah (₹21 crore). Anil Ambani will face an individual penalty of ₹25 crore.
“Noticee No. 2 (Anil Ambani) is restrained from being associated with the securities market including as a director or Key Managerial Personnel in any listed company, holding/associate company of any listed company, or in any intermediary registered with SEBI, for a period of 5 years, from the date of coming into force of this direction,” the SEBI order reads.
The entities have been found to have either received illegally obtained loans or served as intermediaries in facilitating the unlawful fund diversion from RHFL. As per SEBI, RHFL disbursed a total of ₹9,295.25 crore in loans to 45 GPCL entities, comprising ₹8,470.65 crore in recorded loans and ₹824.60 crore in unaccounted disbursals.
In addition, a ₹25 crore penalty has been imposed on entities including Reliance Unicorn Enterprises, Reliance Exchange Next, Reliance Commercial Finance, Reliance Cleangen, Reliance Business Broadcast News Holdings, and Reliance Big Entertainment Private.
SEBI findings
Upon receiving multiple complaints alleging fund diversion by Reliance Home Finance, SEBI started an investigation for FY 2018-19. In its 222-page long order, SEBI concluded that during FY 2018-19, Reliance Home Finance (RHFL) approved and disbursed large General-Purpose Corporate (GPC) loans totalling several thousands of crores to borrowers with weak financials and no substantial collateral.
These loans deviated significantly from standard credit due diligence practices, including waiving internal credit ratings and default probability assessments. Despite a board directive in February 2019 to halt such loans, RHFL continued issuing them, with Anil Ambani's approval, even though many loans eventually had to be classified as Non-Performing Assets (NPAs).
The investigation also discovered the top management continued with its irregular lending practices despite strong directives against such practices from the company's Board of Directors.
SEBI found that Anil Ambani, with the help of RHFL's key managerial personnel, had orchestrated a fraudulent scheme to siphon off funds from RHFL by disguising them as loans to entities linked to him. Anil Ambani, while not directly approving the loans, "influenced" disbursement due to his role in the Reliance ADA Group, SEBI found. RHFL officials, including Amit Bapna, Ravindra Sudhalkar, and Pinkesh Shah, played ‘critical’ roles in the improper loan approval and management, it said. As most borrowers failed to repay loans, RHFL defaulted on its debt obligations. This resulted in the company's resolution under the RBI Framework, adding to the troubles of its public shareholders.
