Indian market regulator, SEBI has imposed a five-year ban on industrialist Anil Ambani and 24 other entities, including former senior executives of Reliance Home Finance, from participating in the securities market. This action is a result of their involvement in the misdirection of company funds.
Indian markets regulator, the Securities and Exchange Board of India (Sebi), has imposed a five-year ban on industrialist Anil Ambani and 24 others, including top executives of Reliance Home Finance Ltd. (RHFL), from participating in the securities market. This action follows a probe into RHFL, where funds were allegedly diverted through questionable loans, leading to significant losses and raising concerns among investors.
In addition to the ban, Sebi has imposed a penalty of ₹25 crore on Ambani and barred him from holding any directorial or key managerial positions in listed companies or any intermediaries registered with the regulator for five years.
Reliance Home Finance has also been barred from the securities market for six months and fined ₹600,000.
Unprecedented loan disbursements to unworthy entities
Sebi noted that during FY18 and FY19, RHFL disbursed thousands of crores in GPC loans to entities with negative net worth and minimal assets. These loans were issued without any collateral or security, representing a significant deviation from standard credit due diligence.
RHFL’s management ignored internal credit ratings and waived the requirement for assessing the probability of default, allowing these risky loans to proceed unchecked. Despite a board directive on February 11, 2019, to halt GPC loan disbursements, RHFL, under the leadership of Ambani, continued to issue these loans, further exacerbating the financial irregularities.
