Anil Ambani’s financial troubles deepen as Canara Bank declares Reliance Communications (RCom) and its subsidiary, Reliance Telecom Limited (RTL), as fraud cases. The bank alleges misuse of loan funds and violations of the terms set during loan approval.
Loan Details and Allegations
Canara Bank had provided a Rs.1,050 crore loan to RCom in 2017, including term loans, guarantees, and letters of credit. However, RCom reportedly defaulted, and the loan was classified as a non-performing asset (NPA) in March 2017.
The bank accuses RCom and RTL of fund mismanagement, including:
- Diverting Rs.6,265.85 crore to repay other loans, against loan conditions.
- Using Rs.1,883.08 crore for equipment later misused for unauthorized purposes.
- Directing Rs.5,501.56 crore to related parties without proper justification.
Notice Issued
On October 28, Canara Bank officially declared the accounts of RCom and RTL as fraud. The notice states that the company did not utilize the loan as per the agreed terms and conditions.
Reliance Communications Responds
RCom acknowledged receiving the bank’s notice in an exchange filing but has not offered a detailed response. The company, which filed for bankruptcy in 2018, claims protection under bankruptcy laws for loans taken before insolvency proceedings began.
Financial Snapshot
According to the notice, RCom, RTL, and RITL (Reliance Infratel Limited) collectively borrowed Rs.31,580 crore from various banks. The funds were distributed as follows:
- Rs.13,667.73 crore for loan repayments to banks and financial institutions.
- Rs.12,692.31 crore for payments to vendors and other stakeholders.
Canara Bank’s Audit Findings
The bank’s audit highlights fund diversion and misuse, prompting the declaration of fraud. Canara Bank stated that these findings reflect clear violations of loan agreements, leading to legal and financial scrutiny of the company’s operations.
Bankruptcy and Legal Protection
Since its bankruptcy declaration in 2018, RCom has been undergoing insolvency resolution. As per bankruptcy laws, creditors cannot initiate legal proceedings for loans disbursed before insolvency filings, complicating recovery efforts for banks like Canara Bank.
This latest development adds to the ongoing troubles of Anil Ambani and his companies, which have faced mounting legal and financial challenges in recent years.
