Canara Bank has reportedly classified the loan accounts of Anil Ambani’s bankrupt telecom venture, Reliance Communications, and its subsidiary as fraudulent, alleging the misappropriation of Rs 1,050 crore loaned in 2017. These loans were initially intended for capital expenditure and debt repayment.
What does Canara Bank’s “fraud letter” to Reliance Communications says
According to a report in Economic Times, in a letter to Reliance Communications dated November 5, Canara Bank stated, “After availing and enjoying the said loans, credit facilities, your company had committed default and breached the sanctioned terms and conditions. The loan accounts slipped into Non-Performing Asset (“NPA”) status on 09.03.2017.”
The bank claimed the accounts were classified as fraudulent due to the non-utilization of funds as per the sanctioned terms and inter-company transactions used to settle other debts. “Loans availed were also invested in mutual funds and fixed assets, and these were liquidated to make payments to related and non-related parties,” the bank said.
Reliance Communications, which went bankrupt in 2018, responded that the company is undergoing an insolvency resolution process. Since the loans were taken before entering insolvency, the company is shielded from lawsuits by creditors. The classification of the loan accounts as fraudulent will not affect the ongoing insolvency proceedings, the company added.
Previously, a forensic audit supported by State Bank of India, Union Bank of India, and Indian Overseas Bank revealed questionable transactions worth Rs 5,500 crore within three Anil Ambani-led Reliance Group entities. However, the lead banker, SBI, later withdrew the fraud investigation tag.
Reliance Communications has consistently denied any wrongdoing.