Bank of Baroda classifies RCom, Anil Ambani loan accounts as 'fraud'

Bank of Baroda has classified loan accounts of Reliance Communications Ltd (RCom) and its former promoter Anil Ambani as “fraud”, escalating troubles of the debt-laden telecom operator that has been under insolvency proceedings since 2019.

In an exchange filing on Thursday, RCom said it had received a communication dated September 2 from the state-owned lender. The notice cited the Reserve Bank of India’s Master Directions on Fraud Risk Management in Commercial Banks and Financial Institutions, 2024, as the basis for the classification.

The move follows similar actions by the State Bank of India (SBI) and Bank of India (BoI), which last month flagged RCom’s loan account and Ambani’s name, alleging diversion of funds in 2016.

RCom insolvency proceedings

RCom stressed that the credit facilities under scrutiny predate its insolvency admission. “The company is undergoing corporate insolvency resolution under the Insolvency and Bankruptcy Code, 2016. A resolution plan approved by creditors is awaiting clearance from the National Company Law Tribunal,” it said. Any such loans, the company added, must be dealt with within the resolution plan or liquidation process.

RCom has earlier contested the banks’ claims, stating that Anil Ambani was a non-executive director who resigned in 2019 and had “no role in the day-to-day operations or decision-making of the company.” The former promoter, it said, is being “selectively singled out”.

Banks allege irregularities

BoI had sanctioned a ₹700-crore loan to RCom in August 2016 for capital expenditure, operational needs and liability repayment. According to earlier disclosures, half the disbursed funds were placed in a fixed deposit. This move was flagged as being in breach of the loan conditions.

Bank of Baroda, in its order, rejected representations from Ambani’s legal team that the show-cause notices were procedurally flawed or based on outdated directions. The bank’s fraud identification committee concluded: “Submissions by Ambani were found repetitive, unsubstantiated, and without merit. Forensic Audit Report (FAR) showed financial irregularities not rebutted with evidence.”

“Bank maintained sufficient opportunity was given, fraud classification is valid, and principles of natural justice observed,” the bank’s letter read.

SBI, in June, had alleged misappropriation of funds through transactions that violated loan covenants. Acting on its complaint, the Central Bureau of Investigation (CBI) last month searched properties linked to RCom as well as Ambani’s residence.