New Delhi: In a significant move, Canara Bank has labeled the loan accounts of Reliance Communications and Reliance Telecom, both part of Anil Ambani’s Reliance Group, as “fraud.” The bank has accused the companies of misusing the funds obtained through credit facilities, alleging large-scale fund diversion and financial irregularities. This announcement comes amid ongoing bankruptcy proceedings involving Reliance Communications.
The Allegations in Detail
Canara Bank issued a notice highlighting serious discrepancies in the usage of funds by the two companies. The notice revealed that the bank had extended credit facilities amounting to ₹1,050 crore. However, in March 2017, following defaults in repayment and violations of loan terms, the accounts were classified as non-performing assets (NPAs).
An audit conducted by the bank uncovered alarming irregularities in the handling of loans across the Reliance Group. According to the findings:
- Out of the total loan amount of ₹31,580 crore, approximately ₹13,667.73 crore (44%) was used to repay loans of other banks, a practice not permitted under the terms of the loan.
- ₹12,692.31 crore (41%) was transferred to related companies, raising concerns of unauthorized fund transfers.
- ₹6,265.85 crore was further utilized to settle additional loans from other banks, breaching loan usage guidelines.
- ₹5,501.56 crore was diverted to related entities, and ₹1,883.08 crore was invested in financial instruments for unapproved purposes.
The bank asserted that these actions represent a blatant misuse of funds, constituting clear cases of fund diversion and non-compliance with loan terms.
Reliance Communications: A Troubled Legacy
Anil Ambani’s Reliance Communications has been grappling with mounting financial challenges for years. The company is currently undergoing insolvency proceedings, leaving creditors scrambling for recoveries. Despite the gravity of the allegations, neither Reliance Communications nor Reliance Telecom has issued a response to Canara Bank’s notice.
The Larger Implications
This development adds to the financial woes of the Reliance Group under Anil Ambani, which has faced significant setbacks in recent years. Canara Bank’s action underscores the growing scrutiny of corporate financial practices and the banking sector’s push for accountability in cases of loan misuse.
What Lies Ahead?
With allegations of fund diversion amounting to thousands of crores, the case is likely to invite further investigation from regulatory authorities. This could potentially lead to intensified legal and financial repercussions for the beleaguered telecom company and its leadership.
As Reliance Communications navigates its insolvency, the spotlight remains on the broader corporate governance practices within the group and the accountability of its leadership in the alleged financial mismanagement.
