MUMBAI: Market regulator Sebi late on Friday banned Anil Ambani, three of his associates and Reliance Home Finance, one of his former group companies, from the market for three months for misusing funds of the company and diverting it to other group entities to pay off debt. Ambani and the others – Amit Bapna, Ravindra Sudhalkar, Pinkesh R Shah – were also restrained from associating with any listed entities.
The case relates to misuse of funds of Reliance Home Finance, for which its then auditors PriceWaterhouse & Co (PwC) had refused to sign the annual accounts and then resigned.
Ambani, Amit Bapna, Ravindra Sudhalkar, Pinkesh R Shah and Reliance Home Finance “are restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders”. Sebi also said that Ambani, Bapna, Sudhalkar and Shah were “restrained from associating themselves with any intermediary registered with Sebi, any listed public company or acting as directors/promoters of any public company which intends to raise money from the public, till further orders.”
In the 100-page order, S K Mohanty, Sebi whole time member, noted that the origin of the proceedings could be traced to multiple sources which included a letter of resignation by PwC to Reliance Home Finance as its statutory auditor citing various grounds and reasons. Sebi had also received complaints from people alleging siphoning off/diversion of funds of the company by its promoters and the management.
In addition, the regulator had also received multiple fraud monitoring returns from banks which alleged that funds borrowed by RHFL from different lenders were partly used towards repayment of loans etc. Sebi had also received complaints that various, connected parties and companies with weak financials “were used as conduits to siphon off funds from (the company) to entities connected to the promoter company,” that is Reliance Capital.
Acting on these letters and complaints, Sebi had started investigating the affairs of Reliance Home Finance, for fiscal 2018-19 and found that most of the allegations were true, the order said.
Sebi found that Reliance Home Finance had transferred funds to at least 13 entities which included CITI Securities & Financial Services, Tulip Advisors and Arion Movie Production. These loans were masked as general purpose corporate loans (GCPL), a legal practice for accounting purposes. For example, a forensic audit found that during FY19, Rs 14,578 crore was disbursed by the company to numerous entities as GPCL, out of which Rs 12,489 crore was disbursed to 47 companies linked to the promoters and the management of Reliance Home Finance.


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