New Delhi:
Securities and Exchange Board of India (SEBI) on Friday banned Reliance Home Finance Limited (RHFL), industrialist Anil Ambani and three other securities market officials for allegedly transferring funds from the company.
The three other persons are Amit Bapna, Ravindra Sudhakar and Pinkesh R Shah.
In a 100-page interim injunction, the regulator also barred individuals from “associating themselves with an intermediary registered with SEBI, a publicly traded public company, or acting directors or promoters of a public company that intends to raise funds.” to the public until further notice”.
The injunction, which relates to the alleged transfer of funds from the company, has been issued against a total of 28 individuals and entities (notices).
The focus of the SEBI study was to look broadly at how loans were disbursed by RHFL to various borrowing entities over the 2018-19 period.
The market regulator noted that the origins of the current proceeding can be traced to multiple sources, including a letter from Price Waterhouse & Co addressed to RHFL announcing their resignation from the company’s board of directors; and complaints received by SEBI about the transfer/misappropriation of funds from RHFL by promoters and company management.
There were multiple fraud-monitoring returns (FMRs) from banks alleging, among other things, that funds borrowed by RHFL from various lenders were being used in part to repay loans, the regulator said.
It was also complained that several affiliates and companies with weak financial positions were being used as channels to transfer money from RHFL to entities affiliated with the promoter company Reliance Capital, the injunction said.
“It is noted that an individual, Anil Ambani, who controls the company because of his position as promoter and controlling shareholder through his direct and indirect shareholding, exercises unfettered powers…” SEBI said.
The order noted that the company’s key executives (KMPs), such as executive director and CEO Ravindra Sudhalkar and its chief finance officers (CFOs) – Amit Bapna and Pinkesh R Shah – “instead of bringing such misdeeds to the attention of the board of directors or regulators, on the face of it, appear to be working hand in hand with Mr. Ambani, in transferring the company’s borrowed funds to other financially weak promoter group companies, which is apparent at various stages of approval from that General Purpose Corporate Loans (GPCL) Transactions”.
The amount of loans disbursed by RHFL under General Purpose Corporate Loans has increased exponentially from about Rs 900 crore on March 31, 2018 to about Rs 7,900 crore on March 31, 2019, the order said.
The announcements include Adhar Project Management and Consultancy Private Ltd, Indian Agri Services Pvt Ltd, Phi Management Solutions Pvt Ltd, Arion Movie Productions Pvt Ltd, Citi Securities and Financial Services Pvt Ltd, Deep Industrial Finance Ltd, Azalia Distribution Pvt Ltd and Vinayak Ventures Pvt Ltd.
Gamesa Investment Management Pvt Ltd, Medybiz Pvt Ltd, Hirma Power Ltd, Tulip Advisors Pvt Ltd, Mohanbir Hi-Tech Build Pvt Ltd, Netizen Engineering Pvt Ltd and Crest Logistics and Engineers Pvt Ltd (now known as Cle Pvt Ltd) are among the announcements .
Other notices include Reliance Unicorn Enterprises Pvt Ltd, Reliance Exchange next Ltd, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd, Reliance Broadcast Network Ltd, Reliance Big Entertainment Pvt Ltd and Reliance Capital Ltd.
The regulator noted that the prima facie observations in the warrant were made based on the material available and the prima facie findings will also be considered a cause for a show.
However, it also clarified that the restraint imposed on RHFL must not stand in the way of any resolution/revival plan being approved or required to be approved under any law.