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

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.