SEBI bans Anil Ambani and 24 others, including Reliance Home Finance official, from securities market for five years

PTC News Desk: The Securities and Exchange Board of India (SEBI) has taken a major action against industrialist Anil Ambani and 24 other entities, including former key officials of Reliance Home Finance Ltd (RHFL). The regulator has banned them from participating in the securities market for five years and imposed a substantial penalty of Rs 25 crore on Ambani.

This decision follows an extensive investigation into allegations of fund diversion from RHFL, revealing a fraudulent scheme involving Ambani and his associates.

Details of the Ban

According to SEBI’s 222-page order, Ambani, leveraging his role as chairperson of the ADA Group and his indirect influence over RHFL, conspired with the company’s key managerial personnel to misappropriate funds. These funds were disguised as loans to entities linked to Ambani, which were financially unstable and lacked adequate assets or revenue.

SEBI’s investigation uncovered a fraudulent scheme where funds were siphoned off from RHFL under the guise of “loans” to entities closely associated with Ambani. These borrowers were deemed credit unworthy, resulting in significant financial mismanagement and defaults.

Corporate Governance Failures

The investigation, covering the financial year 2018-19, was initiated in response to numerous complaints about the potential misappropriation of RHFL’s resources. SEBI’s findings highlighted severe lapses in corporate governance at RHFL, where management, under Ambani’s influence, ignored directives to prevent questionable lending practices. The fraudulent activities were mainly driven by a few key individuals within the organisation.

The order states, “SEBI received multiple complaints and reports alleging the diversion of funds from Reliance Home Finance Ltd. An investigation was conducted for FY 2018-19 to determine if any provisions of securities laws were violated.”

Many entities that received these loans, often linked to RHFL’s promoters, defaulted on repayments, exacerbating RHFL’s own debt issues.

Penalties and Restrictions

As a result of his involvement in the scandal, SEBI has imposed a penalty of Rs 25 crore on Anil Ambani and barred him from serving as a director or Key Managerial Personnel (KMP) in any listed company or registered intermediary for the next five years. Additionally, RHFL has been banned from the securities market for six months and fined Rs 6 lakh.

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