Anil Ambani under fresh heat as Bank of Baroda declares RCom loan fraud
After State Bank of India and Bank of India, another lender, Bank of Baroda, has classified the loan account of insolvent Reliance Communications as fraudulent and named its former director, debt-ridden Anil Ambani, citing alleged misutilisation of loans granted more than a decade back, according to a regulatory filing. Bank of Baroda had sanctioned Rs.1,600 crore and another Rs.862.50 crore in line of credit to the company. Of the total Rs.2,462.50 crore, Rs.1,656.07 crore remains outstanding as on August 28, according to the lenders’ letter disclosed by RCom in the regulatory filing.
“The account was classified as a non-performing asset (NPA) with effect from June 5, 2017,” the letter said. While RCom is undergoing corporate insolvency resolution proceedings to find a suitor to take over the company and clear its liabilities, BoB, in the letter, said that currently, there is no active resolution plan that is approved by the NCLT. It went on to state that the declaration of fraud is based on findings/observations in forensic audit reports and “such classification is in line with the principles of natural justice”.
In a statement, a spokesperson of Ambani said the action of Bank of Baroda pertained to matters dating back more than 12 years. Stating that RCom had a lender consortium comprising 14 banks, it said, “after an inordinate lapse of more than 10 years, select lenders have now chosen to initiate proceedings in a staggered and selective manner targeting Mr Ambani”.
Previously, State Bank of India (SBI) and Bank of India (BoI) had given similar tags to RCom and Ambani. 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. RCom 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. CBI and ED have already registered cases against Anil Ambani for bank loan fraud and diversion of funds.
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