After SBI, Bank of India Tags RCom & Anil Ambani's Loan Account 'Fraudulent'

The Bank of India has declared the loan account of Reliance as “fraudulent”, while also naming Anil Ambani in connection with alleged fund diversion, according to a regulatory filing. The state-owned lender had sanctioned a ₹700 crore loan to the company in August 2016 for capital expenditure, operational needs, and liability repayments.

However, half of the sanctioned amount disbursed in October 2016, were reportedly invested in a fixed deposit – a move the bank said violated the terms of the sanction letter.

On August 22, RCom said that it has received a letter from Bank of India dated August 8 stating the bank’s decision to “classify the loan accounts of the company, Anil Ambani (promoter and erstwhile director of the company), and Manjari Ashok Kacher (erstwhile director of the company), as fraud”.

The State Bank of India (SBI) in June had also classified Reliance Communications’ account as “fraudulent”, accusing the company of misusing loan proceeds through transactions that breached lending terms.

Following this, the Central Bureau of Investigation (CBI) on Saturday carried out searches at properties connected to RCom and Anil Ambani’s residence.

The investigative agency registered a case after the SBI reported a loss of of ₹2,929.05 crore, resulting from the alleged misappropriation of RCom and Anil Ambani, the younger brother of Asia’s richest man, Mukesh Ambani.

Ambani’s spokesperson responded to the case, strongly denying all allegations and charges. “The complaint filed by SBI pertains to matters dating back more than 10 years. At the relevant time, Ambani was a non-executive director of the company, with no involvement in the day-to-day management,” the spokesperson said in an official statement.

 "It is pertinent to note that SBI, by its own order, has already withdrawn proceedings against five other non-executive directors. Despite this, Ambani has been selectively singled out,” the statement added.

The bank has also initiated personal insolvency proceedings against Anil Ambani under IBC, which are being heard at the NCLT. SBI had earlier marked Ambani and the company as ‘fraud’ in November 2020 and filed a complaint with the CBI in January 2021, but this was returned following a Delhi High Court status quo order.

In March 2023, the Supreme Court ruled that banks must give borrowers a chance to be heard before declaring accounts fraudulent. Following this judgment, SBI reversed its fraud classification in September 2023 but reapplied it in July 2024 after completing the required process.