Why Anil Ambani Has Been Banned From Markets — NDTV Profit Explains
The Securities and Exchange Board of India on Friday imposed a five-year ban on industrialist Anil Ambani and 24 other entities for diversion of funds from Reliance Home Finance Ltd.
In addition to the ban, the SEBI has fined Ambani Rs 25 crore and prohibited him from holding any position in the securities market, including roles as a director or key managerial personnel in listed companies, for the same duration.
The market regulator came out with a 222-page order in the case.
Five Key Reasons Why SEBI Banned Anil Ambani
The SEBI investigation has established the existence of a fraudulent scheme, orchestrated by Anil Ambani and administered by key executives of RHFL, to syphon funds from the publicly listed company by structuring them as 'loans' to credit unworthy conduit borrowers. These entities have been found to be 'promoter-linked entities' with ties to Ambani.
The funds diverted to group companies and related entities amount to Rs 8,800 crore. The loans were given to companies with little to no assets, cash flow, net worth, or revenue. These include firms like Reliance Capital Ltd., Reliance Commercial Finance Ltd., Reliance Power Ltd., and Reliance Infrastructure Ltd.
Most of these borrowers failed to repay loans, leading RHFL to default on its own debt obligations. As a result, the company's public shareholders have been left high and dry.
The market regulator and two forensic audits of PwC, which is the statutory auditor of RHFL, and Grant Thornton, the forensic auditor appointed by Bank of Baroda, which was the lead bank of the consortium of lenders of RHFL, found similar violations.
Strong directives from the RHFL board to stop lending practices were ignored by Anil Ambani, who used his position as chairperson of the Anil Dhirubhai Ambani Group.
Watch | SEBI Ban On Anil Ambani Explained
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