Canara Bank has declared the loan accounts of Anil Ambani’s Reliance Communications (RCom) and its subsidiaries as fraud, according to a notice sent to the bankrupt telco on Friday. This is the fourth lender to do so after State Bank of India, Union Bank of India and Indian Overseas Bank declared the company’s accounts as fraud in December 2020.
Utilisation of funds for purposes other than those mentioned in the sanction document and inter-company transactions where bill amounts were utilised to pay other debts were among the reasons outlined by Canara Bank.
“The bank had sanctioned credit facilities, term loans, guarantee, and letter of credits under non-fund based credit limit of Rs 1,050 crore for RCom. After availing and enjoying the said loans, credit facilities, your company had committed default and breached of the sanctioned terms and conditions,” Canara Bank said in the notice.
The loan account was declared a non-performing asset in March 2017. After the default, Sweden’s Ericsson took the telco to the National Company Law Tribunal, Mumbai (NCLT) in 2018. In 2020, BDO India conducted a forensic audit of the books of the telco.
The audit revealed that the telco and its subsidiaries received Rs 31,580 crore from banks, of which Rs 6,265.85 crore was used to repay other bank loans, Rs 5,501.56 was used for payment to related and connected parties and Rs 1,883.08 crore was used to invest in mutual funds, which were immediately liquidated and utilised for payments to related and non-related parties.
These transactions, Canara Bank said, were not done for purposes mentioned in the sanction letter.