BoB declares RCom & Anil Ambani as fraudulent
New Delhi: Bank of Baroda (BoB) has declared the loan account of Reliance Communications (RCom) and its former director Anil Ambani as fraudulent, joining SBI and Bank of India, which had earlier taken similar action.
The classification, communicated through a letter dated September 2, cites alleged misutilisation of loans granted more than a decade ago.
According to disclosures, BoB sanctioned Rs 1,600 crore and an additional Rs 862.50 crore as line of credit to RCom. Out of the total Rs 2,462.50 crore, an outstanding Rs 1,656.07 crore remains unpaid as on August 28. The account was designated a non-performing asset (NPA) on June 5, 2017.
RCom, burdened with total debt of Rs 40,400 crore as of March, is currently undergoing insolvency proceedings, but BoB said no resolution plan has yet been approved by the NCLT.
The bank noted that its fraud classification is based on forensic audit findings and complies with the principles of natural justice.
Under banking rules, once an account is tagged fraudulent, it must be referred to enforcement agencies for potential criminal action, while the borrower is barred from fresh institutional credit for five years.
In response, a spokesperson for Ambani rejected the allegations, stressing the matters date back over 12 years. The statement noted that Ambani served only as a non-executive director from 2006 until resigning in 2019 and was never a key managerial person involved in daily operations. It alleged that after an “inordinate lapse of more than 10 years,” select lenders were targeting him in a “staggered and selective manner.”
Meanwhile, Reliance Power issued a clarification that BoB’s action against RCom has no bearing on its operations or financial performance.
In a stock exchange filing, it underlined that Reliance Power is an independent listed entity with no business or financial links to RCom. The company added that Ambani has not served on its board for more than 3.5 years.
The resolution process of RCom remains pending before the NCLT and the Supreme Court, despite the Committee of Creditors led by SBI approving a plan in March 2020.
