“Sebi has imposed a five-year ban on Anil Ambani and 24 others from the securities market due to funds diversion.”

“The market regulator sebi has slapped a ₹25 crore fine on Ambani and barred him from serving as a director or key managerial personnel (KMP) in any listed company, its associate firms, or any Sebi-registered entity for the next five years.”

The Securities and Exchange Board of India (Sebi) has banned Anil D. Ambani and 24 others from the securities market for five years due to the alleged diversion of funds from Reliance Home Finance Ltd (RHFL).

Sebi has also imposed a ₹25 crore fine on Ambani and prohibited him from serving as a director or key managerial personnel (KMP) in any listed company, its associate firms, or any Sebi-registered entity for five years. Additionally, RHFL has been barred from the securities market for six months and fined ₹6 lakh.

The regulator has imposed fines ranging from ₹25 crore to ₹27 crore on 24 other entities involved. This 222-page regulatory action followed an investigation into possible violations during 2018-19. Reliance Capital, a major promoter of RHFL, held 47.91% of its equity.

Sebi reviewed loan application documents related to General Purpose Working Capital Loans (GPCL) and found that out of 70 applications totaling ₹6,187.78 crore, 14 applications involving ₹1,472.16 crore were approved by Ambani in his role as chairman of the Anil Ambani Group. This approval occurred despite a February 11, 2019 decision by the RHFL board to halt further corporate loans.

Sebi uncovered a fraudulent scheme orchestrated by Ambani and executed by RHFL’s KMPs, designed to siphon off funds by structuring them as loans to credit-unworthy conduit borrowers and further onward borrowers, all linked to Ambani.

The board of RHFL, after noting the disproportionate lending to GPCL borrowers (55% compared to 45% for housing loans), formed a sub-committee to review such exposures bi-monthly. Despite issuing strong directions regarding GPCL loans, Sebi claims that company officials failed to comply.

The investigation revealed that most GPCL borrowers’ accounts became non-performing assets (NPAs), leading RHFL to default on its payment obligations and eventually face resolution under the RBI framework. As a result, public shareholders saw the company’s share price plummet from around ₹59.60 in March 2018 to just ₹0.75 by March 2020.

Sebi also noted a significant governance failure, driven by certain KMPs under Ambani’s influence. The lenient approach to approving loans for companies with minimal assets or revenue suggested a dubious objective behind these loans.

Ambani and three former RHFL officials — Amit Bapna, Ravindra Sudhalkar, and Pinkesh Shah — who were KMPs during 2018-19, have been barred from associating with the securities market, including as directors or KMPs, for five years. Bapna has been fined ₹27 crore, Sudhalkar ₹26 crore, and Shah ₹21 crore.

The remaining entities — Reliance Unicorn Enterprises, Reliance Exchange Next, Reliance Commercial Finance, Reliance Cleangen, Reliance Business Broadcast News Holdings, and Reliance Big Entertainment — have each been fined ₹25 crore for either receiving illegally obtained loans or acting as intermediaries in the unlawful diversion of funds from RHFL.