On Monday, the Securities and Exchange Board of India (Sebi) announced significant penalties against Anmol Ambani, son of industrialist Anil Ambani, and Krishnan Gopalakrishnan, the former Chief Risk Officer of Reliance Housing Finance. The penalties are a result of their failure to exercise due diligence in approving corporate loans linked to Reliance Home Finance.
Penalties Imposed
- Anmol Ambani:
- Penalty Amount: ₹1 crore
- Reason: Failure to exercise due diligence while approving general-purpose corporate loans (GPCL) despite directives from the board against such approvals.
- Krishnan Gopalakrishnan:
- Penalty Amount: ₹15 lakh
- Reason: Approved various GPCL loans while being aware of substantial deviations in the credit approval memos.
Both individuals are required to pay their respective penalties within 45 days from the order.
Context of the Penalties
- The order follows a previous action by Sebi in August, which barred Anil Ambani and 24 others from the securities market for five years due to the diversion of funds from Reliance Home Finance Ltd. Additionally, a fine of ₹25 crore was imposed on Anil Ambani during that case.
Details of the Violations
- Anmol Ambani’s Actions:
- As a non-executive director of Reliance Home Finance, he approved a loan of ₹20 crore to Accura Productions Private Limited on February 14, 2019. This approval was given after the board had explicitly instructed against issuing any further GPCL loans in a meeting held on February 11, 2019.
- Sebi noted that Ambani acted independently, disregarding the board’s directives, and suggested that his actions were not in the interests of shareholders.
- Krishnan Gopalakrishnan’s Responsibilities:
- Gopalakrishnan was responsible for approving various GPCL loans and failed to adhere to the company’s code of conduct and due process. Sebi highlighted that he should have acted in good faith and prioritized the interests of all stakeholders.
Conclusion
Both Anmol Ambani and Gopalakrishnan have been found in violation of Sebi’s Listing Obligations and Disclosure Requirements (LODR) rules. Their actions demonstrate a significant lapse in governance and risk management within Reliance Home Finance.
Multiple Choice Questions (MCQs):
- What penalty did Sebi impose on Anmol Ambani?
- A) ₹15 lakh
- B) ₹1 crore
- C) ₹25 crore
- D) No penalty
- Answer: B) ₹1 crore
- Who was the Chief Risk Officer of Reliance Housing Finance penalized by Sebi?
- A) Anil Ambani
- B) Krishnan Gopalakrishnan
- C) Anmol Ambani
- D) None of the above
- Answer: B) Krishnan Gopalakrishnan
- What was the reason for the penalties imposed on Anmol Ambani and Krishnan Gopalakrishnan?
- A) Misappropriation of funds
- B) Failure to exercise due diligence in approving corporate loans
- C) Insider trading
- D) Tax evasion
- Answer: B) Failure to exercise due diligence in approving corporate loans
- Within how many days must Anmol Ambani and Krishnan Gopalakrishnan pay their penalties?
- A) 30 days
- B) 45 days
- C) 60 days
- D) 90 days
- Answer: B) 45 days
- What specific type of loans were Anmol Ambani and Krishnan Gopalakrishnan involved with?
- A) Housing loans
- B) Personal loans
- C) General-purpose corporate loans (GPCL)
- D) Education loans
- Answer: C) General-purpose corporate loans (GPCL)