The Securities and Exchange Board of India (SEBI) has imposed a ban on Reliance Group Chairman Anil Ambani and 24 other entities from the securities market for five years after finding them liable for the diversion of funds.
As a result of the ban, they cannot buy, sell or deal with securities in any manner – directly or indirectly for five years. The SEBI found Ambani liable for orchestrating a fraudulent scheme where entities siphoned off funds from Reliance Housing Finance Limited (RHFL), a publicly listed company. The funds eventually landed in the hands of entities associated or linked with Ambani.
The fraud involved extending general purpose working capital loans to credit unworthy conduit borrowers, which were then further extended to other borrowers, who were connected to Ambani. The SEBI noted that these loans had multiple irregularities and deviations from required procedures, which included the approval of loan applications by entities that had deficient financial conditions. RHFL is a listed subsidiary of Reliance Group and is chaired by Ambani.
Ambani has also been fined INR250 million (USD2.9 million) and can no longer hold the position of a director or any other key managerial position at a listed entity for five years. The total penalties imposed on all the liable parties was INR6.24 billion. The SEBI also said it would determine the quantum of illegal gains and benefits by the entities involved and accordingly initiate action under the law.
