Markets regulator SEBI has banned industrialist Anil Ambani and 24 other entities, including former top officials of Reliance Home Finance Ltd (RHFL), from participating in the securities market for five years. SEBI has also imposed a ₹25 crore fine on Ambani and barred him from being a director or key managerial person in any listed company or market intermediary during this period. Additionally, RHFL has been barred from the market for six months and fined ₹6 lakh.
SEBI’s investigation revealed that Anil Ambani and RHFL’s key managerial personnel were involved in a scheme to divert funds from RHFL. They disguised these funds as loans to companies connected to Ambani. Despite directives from RHFL’s Board of Directors to stop such practices, the management continued these transactions, reflecting a major governance failure.
The regulator’s findings showed that Ambani, using his position and shareholding in RHFL’s holding company, orchestrated the fraudulent scheme. The management approved loans to companies with no financial standing, suggesting a hidden agenda behind these loans. Many of these borrowers, linked to the RHFL promoters, failed to repay, leading to RHFL defaulting on its own obligations.
As a result, RHFL’s share price dropped drastically from ₹59.60 in March 2018 to ₹0.75 by March 2020, leaving over 900,000 shareholders with significant losses. SEBI’s action highlights the severe impact of these fraudulent activities on public shareholders.
Alongside Ambani, SEBI has fined other involved entities, including Reliance Unicorn Enterprises and Reliance Big Entertainment Private Ltd., each ₹25 crore. The fines are for their roles in either receiving the misappropriated funds or facilitating the fraudulent activities.
