Jai Anmol Ambani, the son of business Anil Ambani, has been fined ₹1 crore by the Securities and Exchange Board of India (SEBI). This fine was imposed because Anmol failed to exercise due diligence while approving general-purpose corporate loans related to Reliance Home Finance.
The regulatory authority issued this order on a recent Monday, highlighting the responsibilities of board members and the need to adhere to company guidelines. Alongside Anmol Ambani, Krishnan Gopalakrishnan, the former Chief Risk Officer (CRO) of Reliance Home Finance, was fined ₹15 lakh for his role in approving these loans.
The issue dates back to February 2019 when Anmol Ambani approved a loan of ₹20 crore to Accura Productions Private Limited. This approval occurred on February 14, despite the board of directors’ clear directive during a meeting on February 11, 2019, to avoid approving any more general-purpose corporate loans. This decision to go against the board’s instructions raised serious concerns about Anmol’s judgment and adherence to corporate governance standards.
SEBI’s order pointed out that Anmol, as a non-executive director of Reliance Home Finance, had taken actions that were not aligned with the company’s best interests. The regulator emphasized that Anmol acted outside the boundaries of his role, which raises questions about his motivations and commitment to the company’s ethical standards. In its statement, SEBI said, “Noticee 1 (Anmol Ambani) has not acted with due care and diligence, and has not maintained high ethical standards.”
SEBI also noted that Anmol Ambani’s oversight extended to his roles in other companies within the Reliance Group. He was part of the board of both Reliance Capital and Reliance Home Finance, as well as a director in several other companies under the Anil Dhirubhai Ambani Group (ADAG). This means that he should have been more vigilant regarding the general-purpose corporate loans being approved and how those funds were lent to other group companies.
Similarly, Gopalakrishnan was found to have approved multiple general-purpose corporate loans while being aware of the significant deviations recorded in the credit approval memos. As a senior member of Reliance Housing Finance’s management, he was expected to follow established processes, adhere to the company’s code of conduct, and act in the best interests of all stakeholders involved.
Both Anmol Ambani and Gopalakrishnan have been found to violate SEBI’s LODR (Listing Obligations and Disclosure Requirements) rules. They have been instructed to pay their respective fines within 45 days of the order.
This incident is not isolated. Earlier in August, SEBI barred Anil Ambani and 24 others from participating in the securities market for five years. This was part of a case concerning the diversion of funds from Reliance Home Finance Ltd. Anil Ambani was also fined ₹25 crore in this earlier ruling.
The recent penalties against Anmol Ambani and Gopalakrishnan serve as a reminder of the importance of ethical conduct in corporate governance. It highlights the responsibilities that directors and senior executives have in ensuring that their actions align with the company’s best interests and adhere to regulatory standards.
As corporate governance continues to be under scrutiny, it is crucial for all business leaders to act with integrity, prioritize transparency, and uphold the ethical standards expected of them. The fines imposed by SEBI underscore the regulator’s commitment to enforcing compliance and protecting the interests of shareholders and the public.
