Anil Ambani Banned From Securities Market For Siphoning Funds

Photo: Reuters/Prashant Waydande

MUMBAI (REUTERS) – India’s markets regulator late on August 22 banned Anil Ambani, one of India’s best-known businessmen, and 24 others from the securities market for five years on charges of diversion of funds.

The Securities and Exchange Board of India (SEBI) also imposed a fine of about $3 million on Ambani, saying he orchestrated a scheme to “siphon off” funds from Reliance Home Finance Ltd, a listed subsidiary of conglomerate Reliance Group of which he is chairman.

The ban means Ambani and the others affected are restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, the regulator said.

The regulator said the “fraudulent” scheme was to “siphon off” funds from Reliance Home Finance, which provides loans for housing and construction, by structuring those funds as loans to credit-unworthy borrowers.

Most of these borrowers were linked to “promoters”, an Indian term for large shareholders with the ability to influence company decisions, the SEBI added.

A spokesperson for Reliance Group did not immediately respond to an email seeking comment.

Reliance Group – which spans financial services, infrastructure and telecommunications – was created in July 2006 following a demerger from Reliance Industries Ltd which is led by Anil’s brother Mukesh Ambani.

Anil has seen three of the largest firms within the group, including Reliance Communications, Reliance Capital and Reliance Infrastructure, undergoing bankruptcy or debt restructuring.