Bank of India declares Anil Ambani's loan account as fraudulent
What's the story
State-owned Bank of India has declared the loan account of Reliance Communications (RCom) as fraudulent. The decision comes after a similar move by the State Bank of India (SBI) in June this year. Both banks have alleged fund diversion and violation of sanction terms related to loans given to RCom and its subsidiary, Reliance Telecom Ltd (RTL).
Charges
Allegations of fund diversion and violation of sanction terms
The Bank of India has alleged that the loan accounts of RCom, Anil Ambani (the company's promoter and former director), and Manjari Ashok Kacker (another former director) were fraudulent. The bank claimed that there was an outstanding amount of ₹724.78 crore against these accounts. The charges come after SBI accused RCom of misusing bank funds by entering into transactions that violated loan terms.
Investigation
SBI's complaint has triggered CBI investigation
SBI's complaint has led the Central Bureau of Investigation (CBI) to search offices linked to RCom and Ambani's residence. The CBI has registered a case after SBI claimed a loss of ₹2,929.05 crore due to alleged misappropriation by Reliance Communications and Ambani. Ambani's spokesperson has strongly denied all allegations, saying he will defend himself in court.
Defense
Ambani's spokesperson denies all allegations
Ambani's spokesperson said the SBI complaint pertains to matters over 10 years old. At that time, he was a non-executive director with no day-to-day management involvement. The spokesperson also noted that SBI has already withdrawn proceedings against five other non-executive directors, but Ambani has been selectively singled out.
Financial status
Reliance Communications was admitted to insolvency proceedings in April
In April, Reliance Communications had disclosed a total debt of ₹40,400 crore as of March. The company was admitted to insolvency and bankruptcy proceedings due to unpaid loans. Now, it is being run under the supervision of a Committee of Creditors led by SBI and overseen by a Resolution Professional.