Reliance Group shares hit lower circuit after Sebi bars Anil Ambani for fund diversion

Anil Dhirubhai Ambani group company shares Reliance Home Finance Ltd, Reliance Power, and Reliance Communications touched their lower circuit limits on Monday. This was an after-effect of the Securities and Exchange Board of India's (Sebi) ruling to restrain Anil Ambani, along with 24 others, from the securities market for five years. The action pertains to allegations of fund diversion from Reliance Home Finance Ltd.

The Reliance Power stock slid 4.99 per cent and hit its lower circuit limit of Rs 32.73 on the BSE. Reliance Home Finance Ltd slipped 4.93 per cent at Rs 4.24, and Reliance Communications by 4.92 per cent at Rs 2.32 and touched their respective lower circuit limits. Reliance Infrastructure slipped by 2.90 per cent at Rs 205.55. These declines followed a similar trend on Friday.

Sebi slapped a penalty of Rs 25 crore on Ambani while disqualifying him from acting as director and KMP in any listed company or Sebi-registered entity for five years. Besides, penalties ranging from Rs 21 crore to Rs 25 crore were imposed on 24 entities involved while Reliance Home Finance was barred from the securities market for six months besides a fine of Rs 6 lakh.

The regulatory action followed complaints of siphoning off funds from Reliance Home Finance. Sebi's probe in the fiscal year 2018-19 found Ambani, along with RHFL's KMPs Amit Bapna, Ravindra Sudhalkar and Pinkesh R Shah, having orchestrated a scheme for the siphoning off of funds from RHFL by disguising them as loans to related entities. Despite the board's directions, RHFL management continued the same and rather entered more such transactions that resulted in defaults and finally resolution of the company under the RBI Framework.

The 222-page Sebi order observed how the management disregarded its oversight and extended loans to entities with doubtful financial standing that aggravated RHFL financial woes hurting its public shareholders.