Religare Case: SEBI Imposes 2-Year Market Ban, Rs 5 Crore Fine On Former RFL Chief Arora
Markets regulator SEBI on Thursday barred former Religare Finvest Ltd CEO Kavi Arora from the securities market for two years and imposed a fine of Rs 5 crore in connection with a case of fund diversion. The case relates to the diversion of funds to the tune of Rs 2,473.66 crore of Religare Finvest Ltd (RFL), a subsidiary of Religare Enterprises Ltd (REL), from FY2014-15 till FY2017-18, in the garb of loans through layers of entities for the ultimate benefits of entities controlled by the erstwhile promoters -- Malvinder Mohan Singh and Shivinder Mohan Singh.
In a 128-page final order on Thursday, SEBI Whole Time Member Ananta Barua said that Arora was "involved knee deep in the perpetration of a scheme of diversion of funds." He was appointed as CEO and MD of RFL on November 14, 2011, and resigned from the company in 2017. The alleged diversion of funds happened during the period from FY2014-15 to FY2017-18.
"I note that there is ample material on record to hold that, despite repeated and specific adverse comments by RBI, ICRA, and some lending banks, Notice no 12 gave his consent to the approval of fresh loans under CLB (Corporate Loan Book) and even evergreening of certain loans under CLB," he said. Noticee no 12 is Kavi Arora. "I note that the financial statements of RFL were consolidated with the financial statements of REL on a quarterly basis. The diversion of funds was never disclosed to the shareholders of REL, which mislead them to remain invested in the shares of Religare or deal in the securities of REL," Barua said.