The Securities and Exchange Board of India (Sebi) has barred Anil Ambani, the former chairman of Reliance Home Finance (RHFL), and 24 other entities from the securities market for five years. This decision follows allegations of fund diversion from RHFL, where Ambani and key officials were found to have orchestrated a fraudulent scheme. Sebi also imposed a fine of Rs 25 crore on Ambani, alongside penalties on other individuals and entities involved.
Why Sebi banned Anil Ambani?
As per a PTI report, Sebi’s investigation revealed that Anil Ambani, with the assistance of key managerial personnel at RHFL, siphoned off funds under the guise of loans to entities linked to him. Despite directives from the RHFL Board to halt such practices, the company’s management ignored these orders, leading to a significant governance failure.
Sebi’s Findings in Anil Ambani Case
Sebi’s 222-page order detailed the fraudulent activities, stating that Ambani used his position within the ADA group and his indirect shareholding in RHFL to execute the scheme. The order highlighted that loans were approved to companies with minimal assets or revenue, raising suspicions about the intentions behind these transactions.
Impact on RHFL and Shareholders
The fraudulent activities led to RHFL defaulting on its debt obligations, resulting in the company’s resolution under the RBI Framework. Public shareholders of RHFL faced substantial losses, with the company’s share price plummeting from Rs 59.60 in March 2018 to just Rs 0.75 by March 2020. As of now, over 9 lakh shareholders remain invested in RHFL, bearing the brunt of the financial misconduct.
Sebi imposes fine on Anil Ambani, others
Sebi imposed fines not only on Ambani but also on other former key officials of RHFL, including Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah. Additionally, several entities linked to the Reliance group were fined for their involvement in the illegal diversion of funds from RHFL.
Shares of Anil Dhirubhai Ambani Group dropped by up to 14% after Sebi barred Anil Ambani from the securities market for five years over fund siphoning allegations from Reliance Home Finance. Reliance Home Finance and Reliance Power shares fell 5%, while Reliance Infrastructure shares plummeted 14%. Trading in some other group companies remains suspended.
Anil Ambani and 24 other entities have been banned by SEBI from the securities market for five years due to fund diversion allegations at Reliance Home Finance Limited. SEBI imposed a ₹25 crore fine on Ambani. Additionally, the Supreme Court overturned an ₹8,000 crore arbitral award involving Ambani’s Reliance Infrastructure subsidiary. Ambani’s financial struggles continue amid extensive legal challenges and failed ventures.
