Anil Ambani
Troubles have increased for industrialist Anil Ambani. The State Bank of India (SBI) has taken a big step over his bankrupt company Reliance Communications (RCom) and put his loan account in the category of fraud. Anil Ambani’s lawyer has raised strong objections to this decision and termed it a violation of RBI rules and court orders.
What is the matter?
SBI says that funds were misused in 2016. Based on this, the loan of RCom has been declared a fraud. The bank has also sent a notice to Anil Ambani for this and has said to report his name to the Reserve Bank of India (RBI).
Lawyer accused: unilateral decision
Anil Ambani’s lawyer said that SBI’s decision is shocking and unilateral. It is against the principles of natural justice. He claims that the bank neither gave a chance to hear nor gave any response to his answers for the last one year.
What do RBI rules say?
When a bank declares an account as fraud, it has to inform RBI within 21 days. Also, the matter has to be sent to the CBI or the police.
How much was the debt?
Reliance Communications and its subsidiary companies took a total loan of ₹ 31,580 crore from banks. The company is currently going through the liquidation process. According to the RBI guidelines, promoters or directors who are accused of fraud cannot take loans from any bank or government finance institution for 5 years until they pay the full amount.
Where was the use of money?
SBI report states that a large part of the loan amount was transferred to different places:
- ₹ 13,667 crore (44%) used to repay old debt
- ₹ 12,692 crore (41%) Group only paid to companies
- ₹ 6,265 crore to repay loans of other banks
- Payment of ₹ 5,501 crore connected parties, which were not linked to approved objectives
Apart from this, the use of ₹ 250 crore taken from Dena Bank was also said to be wrong. The amount was transferred to another company as an inter-corporate deposit (ICD), and later it was said that it was used to repay foreign debt.
Accused of misuse of funds
The report said that the loan amount was not used according to the company’s intentions. Many times the amount was first transferred to the account of a group company and then further transferred, no clear reason was given.
Overall, RCom, RITL and RTL conducted inter-corporate transactions of ₹ 41,863 crore, out of which only ₹ 28,421 crore information is available correctly.