Anil Ambani’s Troubles Mount as Bank of India Follows SBI, Tags RCom Account as Fraud

In a significant blow to beleaguered tycoon Anil Ambani, the state-owned Bank of India has classified the loan account of his insolvent firm, Reliance Communications (RCom), as fraudulent. This move follows a similar action by the State Bank of India (SBI) and comes just a day after the Central Bureau of Investigation (CBI) raided Ambani’s residence in connection with the alleged fraud.

According to a regulatory filing by RCom, Bank of India sent a letter on August 8, which was received on August 22, declaring the loan accounts of RCom, Anil Ambani himself, and another former director as fraudulent. The bank cited alleged fund diversion related to a ₹700 crore loan granted in August 2016. Bank of India alleges that half of the disbursed amount was improperly invested in a fixed deposit, a violation of the loan’s sanction terms.

This action from Bank of India compounds the pressure on Ambani, whose premises were searched by the CBI on Saturday following a complaint by SBI. The country’s largest lender had classified the RCom account as fraudulent in June, alleging a loss of ₹2,929.05 crore due to misappropriation of funds.

Anil Ambani’s spokesperson has “strongly denied all allegations and charges,” stating that Ambani will “duly defend himself.” The spokesperson argued that the complaint pertains to matters over a decade old, during which Ambani was a non-executive director with no involvement in day-to-day management. The statement also claimed that Ambani was being “selectively singled out,” as SBI had withdrawn proceedings against five other non-executive directors.

The ‘fraud’ tag has serious consequences under banking regulations. It mandates a referral to law enforcement agencies for criminal investigation and bars the borrower from accessing any new financing from banks for five years. RCom also disclosed that its subsidiary, Reliance Telecom Ltd, has received a similar fraud classification from Bank of India.

Reliance Communications, which has a total debt of over ₹40,400 crore, turned into a non-performing asset (NPA) for Bank of India on June 30, 2017, with an outstanding of nearly ₹725 crore. The company is currently undergoing insolvency and bankruptcy proceedings, managed by a committee of creditors led by SBI.