The Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 21.5 lakh on Reliance Home Finance (RHFL) and its executives for non-compliance with Sebi’s LODR norms.In an Adjudicating Order, the markets watchdog noted that the company had failed to disclose to the exchanges the deviation in the proceeds raised from issue of debt non-convertible debentures, and had not provided information to DT (debenture trustee) despite several follow ups. Sebi had conducted the probe between April 1, 2019 and March 26, 2020 to ascertain lapses in compliance with regulations.In addition, CEO Ravindra Sudhalkar, compliance officer Parul Jain, and CFO Pinkesh Shah were also charged with failing to disclose the deviation in proceeds raised from the NCD, and concealing vital information from a forensic audit report that could have painted the company in negative light.While Reliance Home Finance has been slapped with a Rs 15 lakh fine, Sudhalkar, Jain, and Shah were charged with a penalty of Rs 2 lakh, Rs 2.5 lakh, and Rs 2 lakh, respectively.“…SEBI observed that the proceeds raised from issue of debt NCDs have been diverted towards certain body corporates including its group companies and RHFL has not made any disclosure as required under Regulation 32 of the LODR Regulations…” said the order.Back in January 2020, RHF had, in a press release, refuted any adverse observations in the forensic audit report by Grant Thornton concerning any fraud, embezzlement, siphoning of funds, or falsification of accounts. The company said it had disclosed details of the Rs 7,984 crore disbursed to auditors, regulators, and lenders, in its financial statements.However, the regulator noted (based on findings in the GT report) that general purpose corporate loans were extended to entities with weak financials and potentially indirectly linked entities. This was a significant deviation in disclosure, given that close to 90% of such loans were disbursed to indirectly linked entities.The GT report pegged Rs 12,487 crore disbursed to indirectly linked entities, of the total Rs 14,577 crore disbursed.
