India’s largest government bank, State Bank of India (SBI) has declared a loan account of Reliance Communications (RCOM) led by Anil Ambani as ‘fraud’. The bank has also decided to give the name of former director of the company Anil Ambani to the Reserve Bank of India (RBI). Anil Ambani and his company have once again come into the limelight with this announcement.
Accused of misuse of loan fund
SBI’s Fraud Identification Committee (FIC) has recently alleged that Reliance Communications misused loan funds taken from the bank. According to the report, the company of Anil Ambani spent about ₹ 13,667 crore i.e. about 44% of the total amount of ₹ 31,580 crore, or ₹ 12,692 crore to pay for the concerned parties. This is a direct violation of banking rules.
According to the bank, the company did not follow the terms of the loan documents and did not even give satisfactory clarification when the answer was sought.
Anil Ambani: Funds of other banks are also misused
SBI also stated that a loan of ₹ 250 crore received from Dena Bank, which was to pay the statutory dues, was converted into an inter-corporate deposit through Reliance Communications Infrastructure Limited (RCIL). It was later used to repay foreign commercial debt (ECB).
Similarly, a large amount of ₹ 248 crore taken from India Infrastructure Finance Company Limited (IIFCL) was given to other companies of Reliance Group to repay the loan.
The company is stuck in the bankruptcy process
Reliance Communications (Anil Ambani) is currently under the Corporate Insolvency Resolution Process (CIRP), which began in 2019. The company says that the matter is before 2016 and after the Solution Scheme is implemented under the insolvency law (IBC), it can get legal exemption in old cases.
The company claimed that the company and its directors would get relief from the responsibility for alleged crimes before CIRP if the National Company approves the Law Tribunal (NCLT) solution scheme.
Anil Ambani: Action possibilities and legal screws
Anil Ambani’s lawyers have expressed displeasure against SBI’s move. He has described this decision against “X-Parte” and the principles of natural justice. The lawyers say that the bank did not give Anil Ambani a chance to hear and the decision is against the guidelines of the Supreme Court, Bombay High Court and RBI.
According to RBI rules, when an account is declared ‘fraud’, the bank has to inform the RBI and investigative agencies within 21 days. Also, directors involved in fraud are banned from taking loans from any government bank or financial institution for five years.
Another big shock for Anil Ambani
This latest controversy can prove to be another major setback for Anil Ambani. Anil Ambani’s business empire, already surrounded by financial crises and legal disputes, is constantly weakening.
Reliance Communications has said that she is taking legal advice in the matter and considering further action. However, despite Fraud’s announcement, no strict criminal action has been initiated against Anil Ambani or his company yet.
