Reliance Home Finance Ltd, entrepreneur Anil Ambani, and three other persons were barred from the securities market by the SEBI on February 11 for reportedly siphoning cash from the firm. Amit Bapna, Ravindra Sudhakar, and Pinkesh R Shah are the other three people.
The people were also barred from
“affiliating themselves with any intermediaries registered with Sebi, any listed public business, or acting directors/ promoters of any public company which plans to solicit money from the public until further orders”
in a 100-page interim ruling. The injunction was issued against a total of 28 persons and companies in connection with the suspected siphoning off of cash from the firm (notices).
The SEBI investigation focused on how Reliance Home Finance Ltd (RHFL) disbursed loans to various borrowing organizations during the 2018-19 financial year.
The underlying cause of the current proceedings, according to Sebi, can be traced to multiple sources, including a letter from Price Waterhouse & Co to RHFL informing them of their resignation as the company’s statutory auditor; and complaints received by SEBI alleging siphoning off/diversion of RHFL funds by organizers and management.
The regulator stated there were many Fraud Monitoring Returns (FMRs) from banks alleging, among other things, that cash obtained by RHFL from lending institutions was primarily used to repay debts.
The decision further said that multiple associated persons and corporations with questionable financials were utilized as conduits to divert monies from RHFL to firms linked to the promoter company Reliance Capital.
“It is noted that one individual, Anil Ambani, who controls the company due to his position as a promoter and controlling shareholder through his direct and indirect shareholding, appears to be exercising unfettered powers…”
Sebi said.
The order stated that the firm’s Key Managerial Persons (KMPs), such as Executive Director and CEO Ravindra Sudhakar and the CFOs — Amit Bapna and Pinkesh R Shah —
“rather than bringing such wrongdoings to the notice of the Board of Directors/Regulators, are prima facie found to be hand in glove with Ambani, in siphoning off the money borrowed of the firm to other financially weak promoter group companies, which According to the ruling, the amount of General Purpose Corporate Loans (GPC loans) given by RHFL has surged rapidly from about Rs 900 crore on March 31, 2018, to around Rs 7,900 crore on March 31, 2019.
The authority stated that the prima facie findings in the ruling are based on the information available on file. The prima facie findings should also be regarded as a show-cause notice.
The notices (notices 1 to 28) are also required to show cause why an investigation should not be conducted against them… “(for) suspected breaches of the Sebi Act, 1992, the LODR Regulations, and the PFUTP Regulations,”
Sebi stated, adding that notices had 21 days to respond to the order. They can also indicate if they want to have a personal hearing on a day and time determined later.
The constraint imposed on RHFL, according to Sebi, should not obstruct any resolution/revival plan that has been or will be approved under any legislation.
Edited By- Subbuthai Padma
Published By- Satheesh Kumar
