Religare Enterprises, Religare Finvest settle case with Sebi

NEW DELHI: Religare Enterprises and Religare Finvest on Tuesday settled with markets regulator Sebi a case pertaining to alleged financial mismanagement and diversion of funds after collectively paying Rs10.5 crore towards settlement fees.

Individually, Religare Enterprises Ltd (REL) and Religare Finvest Ltd (RFL) paid ₹5.42 crore and ₹5.08 crore towards settlement amount, respectively, the Securities and Exchange Board of India (Sebi) said in a settlement order.

The order came after the two companies filed an application with Sebi proposing to settle the regulatory violations “without admitting or denying the findings” through a settlement order. “The pending enforcement proceedings for the alleged default ...are settled qua the applicants,” Sebi said in its order, adding that it will not initiate enforcement action against them for the default.

Sebi had received complaints alleging financial mismanagement and diversion of funds primarily in RFL, a subsidiary of REL which is a listed company, for the benefit of the promoters/ promoter group companies.

Thereafter, the regulator conducted an investigation wherein it was observed that RFL was part of a fraudulent and deceptive scheme and acted in a fraudulent manner which led to diversion of funds to the tune of ₹2,473.66 crore through a material subsidiary of REL for the ultimate benefit of promoters, the order noted.

Further, it was observed that the consolidated financials of REL were not true and fair and were misleading to the shareholders of the listed company. It was also observed that despite repeated adverse observations from Reserve Bank of India (RBI) regarding RFL’s corporate loan book, REL did not disclose the same to the stock exchange till 2017, it added.

Accordingly, the regulator initiated proceedings against the entities and issued show-cause notice in November 2020.