New Delhi, September 5: In a major development in India’s corporate and banking sector, Bank of Baroda, one of the country’s leading public sector banks, has classified the loan accounts of Reliance Communications Ltd. (RCom) and its former Director, Anil Ambani, as “fraud.” The declaration was made through an exchange filing on Thursday and pertains to loans taken prior to RCom’s entry into the Corporate Insolvency Resolution Process (CIRP).
RCom, once a telecom giant, has been undergoing insolvency proceedings since June 2019 under the Insolvency and Bankruptcy Code (IBC), 2016. The company has clarified that the disputed loans relate to a period before the initiation of CIRP and must therefore be addressed within the framework of a resolution plan or liquidation. RCom’s affairs are currently managed by Resolution Professional Anish Niranjan Nanavaty, while Anil Ambani resigned from the board in 2019.
Ambani, who has denied the allegations, stated through a spokesperson that the Bank of Baroda’s action refers to matters dating back more than 12 years, around 2013. The statement emphasized that he served only as a Non-Executive Director between 2006 and 2019, with no role in daily operations or decision-making, and was never an Executive Director or Key Managerial Personnel (KMP) of the company.
A resolution plan for RCom has already been approved by the Committee of Creditors and is awaiting the final nod from the National Company Law Tribunal (NCLT). Meanwhile, RCom has indicated that it is seeking legal advice regarding the classification, stressing that under CIRP, the company enjoys protection from fresh suits or proceedings, including execution of decrees or judgments.
This development comes against the backdrop of an ongoing probe by the Enforcement Directorate (ED) into alleged loan fraud involving Anil Ambani’s group entities. Reports suggest that the ED has sought detailed information from nearly a dozen banks on loans extended to Reliance Housing Finance, Reliance Commercial Finance, and RCom. The suspected fraud is estimated at around ₹17,000 crore.
Bank of Baroda has stated that it will report the classification to the Reserve Bank of India (RBI) and other authorities in line with regulatory requirements. The move follows earlier similar actions by the State Bank of India in June and the Bank of India on August 24, both of which had also labeled RCom’s loan accounts as fraudulent, naming Ambani for alleged fund diversion and violations of loan terms.
