Sebi Demands Rs 154.50 Crore from RHFL Promoter and Five Entities Over Fund Diversion

The Securities and Exchange Board of India (Sebi) has issued demand notices to six entities, including the promoter entity of Reliance Home Finance, for diverting funds. These entities are required to pay Rs 154.50 crore. Sebi has warned that failure to pay within 15 days will result in the attachment of assets and bank accounts.

Representative image

In August, Sebi had imposed fines on these entities, which include Crest Logistics and Engineers Pvt Ltd (now CLE Pvt Ltd), Reliance Unicorn Enterprises Pvt Ltd, Reliance Exchange Next Ltd, Reliance Commercial Finance Ltd, Reliance Business Broadcast News Holdings Ltd, and Reliance Cleangen Ltd. Each entity was directed to pay Rs 25.75 crore, covering interest and recovery costs.

Penalties and Restrictions

Sebi's actions stem from an investigation into fund diversion at Reliance Home Finance. Anil Ambani and 24 other entities, including former key officials of the company, were barred from the securities market for five years. Ambani was fined Rs 25 crore and prohibited from holding positions in listed companies or intermediaries registered with Sebi.

Reliance Home Finance Ltd (RHFL) itself faced a six-month market ban and a Rs 6 lakh fine. Sebi's 222-page order detailed how Anil Ambani, with RHFL's key managerial personnel, orchestrated a scheme to siphon funds by disguising them as loans to related entities.

Role of Key Personnel

The Board of Directors at RHFL had issued directives to halt such lending practices. However, the management ignored these orders, indicating governance failures influenced by Anil Ambani. Sebi noted that RHFL should not be held equally responsible as the individuals involved in the fraud.

The remaining entities either received illegally obtained loans or acted as conduits for fund diversion from RHFL. The restrained entities include former key officials Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah. Fines were imposed on them for their roles in the case.

Fines Imposed on Entities

Sebi levied fines of Rs 27 crore on Amit Bapna, Rs 26 crore on Ravindra Sudhalkar, and Rs 21 crore on Pinkesh R Shah. Additionally, penalties of Rs 25 crore each were imposed on other entities like Reliance Unicorn Enterprises and Reliance Exchange Next Ltd for their involvement in receiving or facilitating illegal fund diversions.

In February 2022, Sebi had issued an interim order restraining Reliance Home Finance Ltd, Anil Ambani, and three others from the securities market due to alleged fund siphoning activities. This interim order laid the groundwork for subsequent penalties and restrictions.

Sebi's actions highlight significant governance failures at RHFL under Anil Ambani's influence. The regulator's measures aim to address these issues by penalising those involved in fund diversion schemes.