Former Religare Finvest Ltd. (RFL) CEO Kavi Arora bas been banned from the securities market for two years. The Securities and Exchange Board of India (SEBI) has also imposed a fine of ₹5 Crore on Arora in connection with a case of fund diversion.

The said case is related to the diversion of ₹2,473.66 Crore of Religare Finvest Ltd. from the financial year 2014-2015 to 2017-2018. As per the case, these funds were diverted in the garb of loans through multiple entities, for the benefit of entities controlled by former promoters Malvinder Mohan Singh and Shivinder Mohan Singh.

In the 128-page final order on March 16, 2023, Ananta Barua, SEBI Whole Time Member, said that Kavi Arora was extensively involved in the perpetration of the diversion of funds. Arora, who served as the CEO and MD of Religare Finvest Ltd. from November 14, 2011, resigned from the company in 2017. The alleged diversion of Religare Finvest Ltd. funds took place from the financial year 2014-2015 to 2017-2018.

In the notice, Ananta Barua said that there is ample evidence on record to hold that Kavi Arora gave his consent to approve fresh loans under the corporate loan book (CLB) and even the evergreening of certain loans under CLB, despite repeated and specific adverse comments by the RBI, ICRA and some lending banks.

Barua added that on a quarterly basis, the financial statements of RFL, which is a subsidiary of Religare Enterprises Ltd (REL), were consolidated with the financial statements of REL. “The diversion of funds was never disclosed to the shareholders of Religare Enterprise, which mislead them to remain invested in the shares of Religare or deal in the securities of Religare Enterprise," he said.

Therefore, as per the order, the diversion of funds from RFL led to indirect manipulation of the REL share price, and such an act is deemed fraudulent and an unfair trade practice relating to the securities market. Arora has also violated the provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules by indulging in the diversion of funds along with the former promoters.

Arora is banned from accessing the securities market and from trading or dealing in securities, directly or indirectly, for two years. He is also restrained from being associated with the securities market as a director or key managerial personnel in a listed company or a SEBI-registered intermediary. The SEBI has also imposed a fine of ₹5 Crore on Arora.