Canara Bank labels Rcom loan accounts as "fraud"
Canara Bank has classified the loan accounts of Anil Ambani’s bankrupt telecom venture Reliance Communications and its unit as fraudulent for allegedly misappropriating Rs 1050 crore loaned from the bank in 2017 which were originally sanctioned for capital expenditure and paying off the company’s existing debt.
“After availing and enjoying the said loans, credit facilities, your company had committed default and breached of the sanctioned terms and conditions. The loan accounts slipped into Non-Performance Asset («NPA») on 09.03.2017,” Canara Bank said in its letter to Reliance Communications dated November 5.
Canara Bank claims that reasons for classifying the accounts as fraud were non-utilization of funds as per sanctioned terms and inter-company transactions to pay other debts. “Loans availed were also invested in mutual funds and fixed assets and the same were liquidated to make payments to related and non-related parties,” the bank said.
However, Reliance Communications which went bust in 2018, said that the company is undergoing an insolvency resolution process. Since the loans were availed before the company moved to insolvency, it is protected from any kind of lawsuits made by any debtor.
Further, the classification of loan accounts as fraud will not have any bearing on the ongoing insolvency procedure, it said.
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