Key Points

This classification pertains to loans taken before RCom entered the corporate insolvency resolution process (CIRP), the exchange filing told on Thursday.

This development marks a crucial turn in the ongoing financial saga surrounding the once-prominent telecom company and its erstwhile director.

RCom, currently undergoing the CIRP under the Insolvency and Bankruptcy Code (IBC), 2016, has said that the loans in question relate to the period before its insolvency proceedings began. The company asserts that these loans must be resolved as part of a resolution plan or through liquidation under the IBC.

RCom is presently under the control of a resolution professional, Anish Niranjan Nanavaty. Anil Ambani is no longer a director of the company.

A resolution plan for RCom has been approved by the committee of creditors and is awaiting approval from the National Company Law Tribunal (NCLT).

Anil Ambani, who resigned from the RCom board in 2019, has denied the allegations. A spokesperson on his behalf said that the Bank of Baroda’s action pertains to matters “dating back more than 12 years, to the period of 2013.”

The statement clarified that Ambani served only as a Non-Executive Director from 2006 till his resignation in 2019, and was “never an Executive Director or a KMP of the company, having no role whatsoever in the day-to-day operations or decision-making.”

Meanwhile, RCom is seeking legal advice regarding Bank of Baroda's action.

The company highlighted that during the CIRP, it is protected from the institution or continuation of any suits or proceedings against it, including the execution of any judgment, decree, or order in any court of law, tribunal, or arbitration panel.

This development comes amidst an ongoing investigation by the Enforcement Directorate (ED) into alleged loan fraud involving Anil Ambani's group entities.

The ED has reportedly sought details from 12-13 banks regarding loans to Reliance Housing Finance, RCom, and Reliance Commercial Finance.

The estimated amount involved in this alleged fraud is nearly Rs 17,000 crore.

Bank of Baroda has said that it will report the fraud classification to various authorities as required by law, including the Reserve Bank of India (RBI).

This reporting will be done in compliance with the RBI's Master Directions on Fraud Risk Management in Commercial Banks and All India Financial Institutions.

As this situation continues to unfold, it remains to be seen how it will impact the ongoing insolvency proceedings of RCom and the broader implications for the Indian banking sector's efforts to address non-performing assets.

Reliance Communications Limited is a telecommunications company based in Navi Mumbai, India. It has been undergoing a corporate insolvency resolution process since June 2019, with its business and assets managed by a Resolution Professional appointed by the National Company Law Tribunal.

Earlier, in June, the State Bank of India (SBI), the country's largest lender had tagged the loan accounts of RCom as fraud. This was followed by a similar action by Bank of India on August 24, which classified the loan account of RCom as fraudulent and named its former Director, Anil Ambani, citing alleged fund diversion and violation of loan terms.

- IANS