SEBI Bans Anil Ambani & 24 Others From Capital Markets Over Fund Diversion Scandal

The Securities and Exchange Board of India (SEBI) has imposed a significant penalty and market ban on Anil Ambani and 24 other entities following a major probe into financial misconduct involving Reliance Home Finance Ltd (RHFL).

The decision bars Ambani and the others from participating in the capital markets for five years.

SEBI’s action follows revelations that Ambani, with the aid of RHFL’s top management, engaged in fraudulent activities to divert funds from the company.

The regulator has slapped a fine of Rs 25 crore on Ambani and prohibited him from holding any position in listed companies or with market intermediaries during this period.

SEBI has barred Reliance Home Finance Ltd from the securities market for six months and fined it Rs 6 lakh.

SEBI’s extensive 222-page order details how Ambani and RHFL executives orchestrated a scheme to funnel company funds under the guise of loans to related entities.

The regulator’s investigation uncovered that RHFL’s board had issued clear directives to halt these dubious lending practices and monitor corporate loans.

The company’s management reportedly ignored these directives, leading to significant governance failures.

SEBI Report: Board’s Directives On Lending Practices Ignored By Management

“The Board of Directors issued strong directives to halt such lending practices and regularly reviewed corporate loans, but the management, influenced by certain key personnel, ignored these orders,” SEBI stated in its report.

SEBI’s findings reveal that the fraudulent scheme involved structuring loans to entities connected with Ambani, which were subsequently passed on to borrowers with questionable creditworthiness.

The inquiry identified 24 individuals and entities, including former RHFL officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah, who faced fines of Rs 27 crore, Rs 26 crore, and Rs 21 crore, respectively.

Other entities involved in the scheme, such as Reliance Unicorn Enterprises and Reliance Big Entertainment Pvt Ltd, received individual fines of Rs 25 crore each for their roles in facilitating or receiving these illegal funds.

SEBI’s order highlighted a cavalier approach by RHFL’s management and Ambani in approving substantial loans to firms lacking substantial assets or financial stability.

This scandal underscores significant lapses in governance and regulatory compliance within the financial sector.

The crackdown by SEBI marks a decisive move in addressing corporate fraud and maintaining market integrity, holding influential figures accountable for their roles in financial mismanagement.

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