Reliance Communications Limited has informed the Exchange about Fraud: RTL
RCOM · price
▲ positive · ▼ negative · ● neutral filings · teal = economic event · numbered = multiple that day (click to pick). Times IST.
State Bank of India has informed Reliance Telecom Limited (RTL), a subsidiary of Reliance Communications Limited (RCOM), that its Fraud Identification Committee has classified RTL's loan account as 'fraud' and will report RTL's name to the RBI. The alleged irregularities relate to the period before RTL entered the Corporate Insolvency Resolution Process (CIRP) and involve alleged misutilisation of bank loans, with RTL having availed around Rs. 375 crore from various banks (including ~Rs. 125 crore from SBI) and routing of funds through related parties. RCOM notes that both RCOM and RTL have been under CIRP since June 28, 2019, with resolution plans already approved by their Committees of Creditors and now awaiting NCLT approval. The company argues that legal protections under Sections 14 and 32A of the Insolvency and Bankruptcy Code should shield both entities from any pre-CIRP liabilities once the resolution plans are approved by NCLT.
While the 'fraud' tag is a serious negative development, both RCOM and RTL are already in insolvency and the resolution plans are awaiting NCLT approval, so operational impact is limited. Shareholders face continued uncertainty, as IBC resolution typically results in significant equity dilution or writedown for existing shareholders of insolvent companies.