Reliance Communications Limited has informed the Exchange about Fraud/Default/Arrest
RCOM · price
▲ positive · ▼ negative · ● neutral filings · teal = economic event · numbered = multiple that day (click to pick). Times IST.
Awaiting price reaction for this filing.
Reliance Communications Limited (RCOM) has disclosed that Bank of India has officially classified the company's loan account of Rs 724.78 crore (Term Loan of Rs 700 crore outstanding) as 'Fraud' based on a forensic audit by BDO India LLP covering April 2013 to March 2017. The bank's subsidiary Reliance Telecom Limited (RTL) has also received a similar fraud classification for its Rs 51.77 crore loan account. The fraud classification also extends to former directors Anil Dhirajlal Ambani and Manjari Kacker (RCOM), and several other directors for RTL. The forensic audit found clear diversion and siphoning of funds — loans meant for 3G spectrum acquisition were instead invested in fixed deposits and used for operational expenses. Both accounts had already turned NPA on June 30, 2017. Bank of India has stated it will report the fraud to authorities and file a complaint with law enforcement. RCOM has been under Corporate Insolvency Resolution Process (CIRP) since June 2019, and a resolution plan approved by 100% of creditors, including Bank of India, is awaiting NCLT approval.
This is a serious negative development, but the company's insolvency status limits the direct impact. The fraud classification may complicate the pending NCLT approval of the resolution plan, and Section 32A of the Insolvency and Bankruptcy Code provides the company immunity from pre-CIRP offenses once the resolution plan is approved. For shareholders, this adds further uncertainty to an already distressed stock, though the equity is unlikely to have meaningful value under the current resolution process.