After SBI, Bank Of India Tags Loan Accounts Of Reliance Communications, Anil Ambani As Fraud

After the State Bank of India, Bank of India has classified the loan account of insolvent Reliance Communications as fraudulent and named its former director, Anil Ambani, citing alleged fund diversion in 2016, according to a regulatory filing.

Bank of India granted a Rs 700-crore loan in August 2016 to RCom for its ongoing capital and operational expenditure and repayment of existing liabilities. Half of the sanctioned amount disbursed in October 2016 was invested in a fixed deposit, which was not permitted as per the sanction letter, according to the bank's letter that RCom disclosed in a stock exchange filing.

RCom said that it has on Aug. 22 received a letter from Bank of India dated Aug. 8 stating the bank's decision "to classify the loan accounts of the company, Anil Dhirajlal Ambani (promoter and erstwhile director of the company), and Manjari Ashok Kacker (erstwhile director of the company), as Fraud".

Previously, SBI had done the same in June this year, alleging misappropriation of bank funds by entering into transactions that violated the terms of the loans.

Following a complaint by SBI, the Central Bureau of Investigation searched premises linked to RCom and Ambani's residence on Saturday.

The CBI said it has registered a complaint after the SBI claimed a loss of Rs 2,929.1 crore, resulting from the alleged misappropriation by RCom and Ambani, the younger sibling of Asia's richest man Mukesh Ambani.

RCom in the latest filing said its subsidiary Reliance Telecom Ltd, too, has received a letter from Bank of India, conveying the lender's decision to classify the loan accounts of the company, Grace Thomas (erstwhile director of RTL and present director of the company) and certain other persons as 'Fraud'.

Under banking laws, once an account is declared fraudulent, it must be referred to enforcement agencies for criminal action, and the borrower is barred from accessing fresh finance from banks and regulated institutions for five years.

Bank of India, in the letter disclosed in the Reliance Communications filing, said RCom had turned nonperforming asset on June 30, 2017, with an outstanding of Rs 724.78 crore.

"The Bank has been following up with the borrowers and guarantors for repayment of dues; however, they have failed and neglected to make repayment of the dues."

A spokesperson on behalf of Ambani said the action by Bank of India pertains to a matter dating back more than 10 years, as per disclosures and records available in the public domain.

"It is pertinent to note that Mr. Anil D. Ambani served only as a Non-Executive Director on the Board of RCom and resigned from this position in 2019, over six years ago. He had no role whatsoever in the day-to-day operations or decision-making of the company. However, Mr. Ambani is being selectively singled out," the spokesperson said.

"Bank of India has classified RCom’s account without following the principles of natural justice. While a Show Cause Notice was issued to Mr. Ambani, the requisite documents were not furnished to him. Bank of India further deprived him of the opportunity of a personal hearing in the matter.

"These actions are contrary to the RBI regulations issued in July 2024, as well as to well-established law and the judgments of the Hon’ble Supreme Court and the Hon’ble Bombay High Court," the spokesperson added.

Astonishingly, after an inordinate lapse of more than 10 years, select lenders have now chosen to initiate proceedings in a staggered and selective manner. the spokesperson said. "Mr Anil D. Ambani categorically denies all allegations and charges and shall pursue remedies available to him in accordance with legal advice."

Reliance Communications had in April disclosed that its total debt stood at Rs 40,400 crore in March.

Following unpaid loans, the company was admitted for insolvency and bankruptcy proceedings. RCom is being managed under the supervision of a Committee of Creditors, led by SBI and overseen by a resolution professional.