Anil Ambani, a former titan of Indian business, is currently facing a significant obstacle. He and 24 other people have been barred from the market for five years by SEBI, the securities market regulator. The cause? a significant fraud that rocked the financial industry at Reliance Home Finance Ltd (RHFL).
Ambani was hit with an incredible ₹25 crore fine. However, that is only the very beginning. The results of SEBI's inquiry pointed to a more extensive scheme that caused RHFL's funds to be diverted, endangering not just the business but also the confidence of its stakeholders.
With a primary focus on home loans, Reliance Home Finance Ltd. (RHFL) was caught in the middle of a financial storm. Reliance Capital Ltd (RCL), which holds 47.91% of RHFL, saw a significant increase in its loan portfolio. But there was a negative aspect to this development.
The results of SEBI were alarming. RHFL's loans to corporate organisations increased dramatically from ₹3,742 crore in 2017–18 to ₹8,670 crore in 2018–19. However, the fact that these loans were given to organisations with questionable financial standing raises doubts about the honesty of these dealings.
The shocking part? RHFL granted 97 General Purpose Working Capital (GPC) loans worth ₹8,470 crore to 45 borrowers during FY 2018-19. Many of these loans were disbursed on the same day as the application, with little to no security or collateral, leaving many questions unanswered.
As SEBI dug deeper, the extent of the scheme became clear. An analysis of 70 loan applications showed that 62 were approved on the same date. This, along with the lack of proper financial backing from borrowers, highlighted a serious breach in governance.
With the investigation concluded, SEBI’s action serves as a stern reminder: market manipulation and fraudulent practices won't be tolerated. For Anil Ambani, the road ahead looks challenging, as he faces the consequences of the RHFL debacle that rocked India's financial sector.