SEBI slaps ₹21 cr fine on 52 entities in Religare Finvest fund diversion case

The 52 entities include borrower or intermediate conduit entities through which the funds were transferred and entities that played a key role in the approval of grant of loans by RFL to various borrower companies

November 01, 2022 04:09 pm | Updated 04:11 pm IST - New Delhi

Logo of Securities and Exchange Board of India (SEBI). File

Logo of Securities and Exchange Board of India (SEBI). File | Photo Credit: Reuters

Capital markets regulator SEBI has imposed a fine totalling ₹21 crore on 52 entities, including Fortis Healthcare Holdings, in a case pertaining to huge diversion and misutilisation of funds of Religare Finvest, an arm of Religare Enterprises.

They have been asked to pay the fine within 45 days, according to an order passed by the Securities and Exchange Board of India (SEBI) on Monday.

The case involves a complex web of transactions whereby the funds of listed company Religare Enterprises Limited (REL) were diverted through its subsidiary Religare Finvest Ltd. (RFL) for the ultimate benefit of the erstwhile promoters — RHC Holding, Malvinder Mohan Singh and Shivinder Mohan Singh. Funds were also misutilised for repayment of earlier loans taken from RFL.

“The whole scheme of fraud led to diversion of funds of ₹2473.66 crore out of a material subsidiary of REL and also mis-utilisation of funds of ₹487.92 crores of RFL,” SEBI said in its 390-page order.

Such a huge diversion and misutilisation of funds of RFL in which REL held 85.64% stake and which contributed 57% of consolidated revenue of RFL as on March 31, 2018 definitely abuses the assets of a listed company and in turn also affects the investors, it added.

The elaborate scheme was perpetrated to use the funds of a material subsidiary of a listed company for the ultimate benefit of the promoters.

The 52 entities include borrower or intermediate conduit entities through which the funds were transferred and entities that played a key role in the approval of grant of loans by RFL to various borrower companies.

While imposing penalties ranging from ₹2 lakh to ₹1 crore, SEBI has taken into consideration the quantum of funds diverted or misutilised amount facilitated by the entities.

Insofar as key managerial personnel (KMPs) or directors of REL, RFL, RHC Holding are concerned, the regulator has taken into consideration the position and responsibilities these officials were holding in such companies, amount of money diverted or misutilised and the tenure of the KMP/directors in the company.

SEBI has levied a fine of ₹1 crore on Bipin Kabra, who was the chief financial officer of RFL and a member of loan approving committees of RFL; ₹90 lakh each on Ranchem Private Limited and Fern Healthcare; ₹85 lakh on Torus Buildcon; ₹70 lakh each on Nishu Finlease, Sunil Kumar Garg and Maninder Singh; ₹30 lakh on SREI Infrastructure Finance; and ₹15 lakh on Fortis Healthcare Holdings.

The order came after the regulator received complaints during January and February 2018 on behalf of the shareholders against the company alleging financial mismanagement and diversion of funds primarily in RFL for the benefit of the promoters / promoter group companies of REL.

Following this, SEBI conducted an investigation to ascertain whether there was any violation of the regulatory norms during the period between April 2011 to March 2018.

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