Anil Ambani is reviewing the Securities and Exchange Board of India (SEBI) order that bans him from capital markets for five years, according to a statement from his spokesperson on Sunday.
The ban, which was issued on August 22, 2024, is part of an order against Ambani and 24 others for allegedly diverting funds. SEBI also imposed a fine of Rs 25 crore on Ambani, accusing him of orchestrating a scheme to siphon off funds from Reliance Home Finance, a subsidiary of Reliance Group.
Ambani, the spokesperson in a statement said, had resigned from the board of Reliance Infrastructure Ltd and Reliance Power Ltd, pursuant to SEBI’s interim order dated February 11, 2022 in the matter pertaining to Reliance Home Finance Ltd.
Regarding the ban order, the spokesperson added, “Mr Ambani is reviewing the final order dated August 22, 2024 passed by SEBI in the said matter, and will take appropriate next steps as legally advised,” reports PTI.
In a separate statement, Mumbai-listed Reliance Infrastructure said it “was not a noticee or party to the proceedings before SEBI in which the order is passed. No directions are given in the order against Reliance Infrastructure Ltd”.
“Ambani had resigned from the board of directors of Reliance Infrastructure Ltd pursuant to the interim order dated February 11, 2022 passed by SEBI in the same proceedings. Therefore, the order dated August 22, 2024 passed by SEBI has no bearing whatsoever on the business and affairs of Reliance Infrastructure Ltd,” it said.
What was the SEBI order?
On August 23, SEBI imposed a five-year ban on Anil Dhirubhai Ambani and 24 others, including former officials of Reliance Home Finance Ltd (RHFL), from participating in the securities market due to alleged fund diversion.
Each of the 25 people, including entities like Reliance Unicorn Enterprises and Reliance Exchangenext, has been fined Rs 25 crore. SEBI also banned RHFL from the securities market for six months and levied a Rs 6 lakh penalty on the company.
SEBI’s 222-page order revealed that Ambani played a significant role in a fraudulent scheme to siphon funds from RHFL by disguising them as loans to unworthy entities linked to promoters.
The order described how Ambani’s key managerial persons, under his instructions, systematically stripped RHFL’s assets, defying the company’s board. Forensic audits uncovered circular transactions and ongoing loans, revealing anomalies in RHFL’s credit process.
“Investigation in the matter has concluded that the Noticees were involved in perpetrating a fraudulent scheme by disbursing general purpose working capital (GPC) loans resulting in erosion of the company’s finances due to such loans eventually being declared NPA,” the order signed by SEBI Whole Time Member Ananth Narayan G said.
The company’s finances deteriorated due to non-performing assets from General Purpose Working Capital Loans, leading to its resolution under RBI guidelines, leaving public shareholders with significant losses.
“Most of the GPCL borrowers’ accounts turned NPAs and as a consequence of the same, RHFL defaulted in its payment obligations towards its lenders which has culminated in its resolution under the RBI framework. As a result, the company’s public shareholders have been left high and dry,” the SEBI order said.
RHFL’s stock plummeted from Rs 59.6 to Rs 0.75 between 2018 and March 2020, impacting over 9,00,000 shareholders.