At least four top executives who were working at Reliance Home Finance (RHF) during the financial year (FY) 2018-19 have been called for questioning by market regulator SEBI as part of an investigation into corporate loans worth around ₹8,000 crore given to related parties.

The executives, who include two board members, a company secretary and the then chief financial officer, will be questioned by SEBI for alleged violations of norms in extending these general purpose corporate loans. More people are likely to be called for questioning and investigations, the sources said.

Fund diversion

SEBI is probing the angle of defrauding RHFL shareholders by fund diversion to related parties, the sources said. The investigations have been on for the past several months but key people are being summoned for questioning by SEBI only now.

An email query to RHFL remained unanswered. RHFL, which was then part of the Anil Ambani-led Reliance Group, granted huge loans to indirectly linked borrowers that had weak financials and shared common features, a forensic audit by Grant Thornton said.

Grant Thornton findings

There were anomalies in the credit appraisal process of RHFL; over 80 per cent of disbursals consisted of corporate loans to a group of 47 borrowers that shared common characteristics and eight of them were related parties to the group companies like Reliance Power and Reliance Infrastructure. These 47 borrowers identified by Grant Thornton have to repay around ₹7,900 crore to RHFL.

Just before loans were disbursed the shareholding pattern of these eight companies changed. These entities included RPL Solar Power, RPL Star Power, RPL Surya Power, RPL Aditya Power, Worldcom Solutions, Hirma Power, Jayankondam Power and Reliance Cleangen.

RHFL is a subsidiary of Reliance Capital, whose board was superseded by RBI on November 29. Red flags were raised against RHFL in April 2019 when credit rating agencies downgraded its ratings to the default category. Following this, Price Waterhouse & Co resigned as the statutory auditor of Reliance Capital and RHFL.

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