The problems of industrialist Anil Ambani, who is heavily in debt, have increased further. Market regulator SEBI has banned Anil Ambani and 24 others, including former key officials of Reliance Home Finance, from the securities market for five years in the case of money misappropriation from the company. SEBI has also imposed a fine of Rs 25 crore on Ambani and banned him from joining the securities market for a period of five years. During this time, he cannot join any listed company or any intermediary registered with SEBI as a director or KMP (Key Managerial Personnel). Apart from this, SEBI has banned Reliance Home Finance from the securities market for six months and imposed a fine of Rs 6 lakh on it. After this news, there is a huge decline in the shares of Anil Dhirubhai Ambani Group. The group’s shares have fallen by up to seven percent.
In its 222-page final order, SEBI said that Anil Ambani hatched a fraudulent conspiracy to embezzle money from Reliance Home Finance with the help of senior officials. It was shown as a loan to subsidiary companies. The company’s board had issued strict instructions to stop such lending practices and regularly reviewed corporate loans. But the company’s management ignored these orders. SEBI said that this shows that there was a major error in the way of functioning, which was done by some key managerial personnel under the influence of Anil Ambani.
How the conspiracy was hatched
In view of these circumstances, the company should not be held liable as the persons involved in the fraud. In addition, the remaining entities have played a role either in being the recipient of illegally obtained loans or in carrying out the process of illegal diversion of funds from RHFL, the regulator said. SEBI said that according to its findings, a conspiracy of fraud was hatched by Noticee No. 2 (Anil Ambani) and executed by KMP of RHFL. Through this conspiracy, money was siphoned off from the listed company and given in the form of loans to ineligible borrowers who were found to be promoters of entities associated with Noticee No. 2 (Anil Ambani).
Ambani used his position as chairman of the Anil Dhirubhai Ambani Group and his significant indirect shareholding in RHFL’s holding company to carry out the fraud. In its order on Thursday, SEBI mentioned the negligent attitude of the company’s management and promoter, under which they sanctioned loans worth hundreds of crores of rupees to companies that had neither assets, nor cash flow, ‘net worth’ or revenue. According to the order, this shows that there was a dangerous motive behind the ‘loan’. SEBI said that the situation becomes even more suspicious when we consider that many of these borrowers are closely associated with the promoters of RHFL.
Fall in shares
Eventually, most of these borrowers failed to repay their loans, leading to RHFL defaulting on its own debt obligations, according to Sebi. This led to the company’s resolution under the RBI framework, leaving its public shareholders in a difficult position. For instance, in March 2018, RHFL’s share price was around Rs 59.60. By March 2020, when the extent of the fraud became clear and the company’s resources were exhausted, the share price fell to just Rs 0.75. Even now, more than nine lakh people have invested in RHFL and are suffering huge losses.
The banned 24 include former key executives of Reliance Home Finance Limited (RHFL) Amit Bapna, Ravindra Sudhalkar and Pinkesh R. Shah. SEBI has also imposed fines on them for their role in the case. In addition, the regulator imposed a fine of Rs 25 crore on Ambani, Rs 27 crore on Bapna, Rs 26 crore on Sudhalkar and Rs 21 crore on Shah. Additionally, the remaining entities, including Reliance Unicorn Enterprises, Reliance Exchange Next LT, Reliance Commercial Finance Limited, Reliance Cleangen Limited, Reliance Business Broadcast News Holdings Limited and Reliance Big Entertainment Private Limited, have been fined Rs 25 crore each.
Interim Order
This fine has been imposed for either illegally obtaining loans or acting as an intermediary in the illegal transfer of funds from RHFL. Market regulator SEBI had passed an interim order in February 2022 and barred Reliance Home Finance Limited, industrialist Anil Ambani and three other individuals (Amit Bapna, Ravindra Sudhakar and Pinkesh R. Shah) from engaging in the securities market till further orders for allegedly siphoning off funds from the company. Anil Ambani, once among the top rich in the country, is today heavily in debt. Most of his companies are undergoing bankruptcy proceedings. His net worth has become zero.