Bank of India Declares Anil Ambani and Reliance Communications as Fraud Accounts After SBI

In a regulatory filing, Bank of India, following State Bank of India, designated Reliance Communications’ loan account as fraudulent and named its former director, Anil Ambani, on the basis of alleged fund diversion in 2016.

Ambani retaliated against the Bank of India, claiming that its actions were biased and against due process. He is being unfairly singled out, Ambani claimed.

According to a representative for Ambani, “It is astounding that certain lenders have now decided to start proceedings in a staggered and selective manner after an excessive lapse of more than 10 years.”

The INR 700-Crore Loan and Alleged Fund Diversion

In August 2016, Reliance Communications received an INR 700-crore loan from Bank of India to cover its capital and operating expenses as well as the repayment of its outstanding debts.

According to the bank’s letter that RCom revealed in the stock exchange filing, half of the sanctioned cash released in October 2016 was invested in a fixed deposit, which was prohibited by the sanction letter. On August 22, RCom reported that it had received a letter from Bank of India dated August 8 announcing the bank’s decision to label the loan accounts of the firm, its promoter and former director Anil Dhirajlal Ambani, and its former director Manjari Ashok Kacker as fraudulent.

In June of this year, State Bank of India (SBI) had previously taken the same action, claiming that bank funds had been embezzled through transactions that went beyond the terms of the loans.

Anil Ambani’s Response to Fraud Allegations

According to a statement from Ambani’s spokeswoman, the Bank of India had sent show-cause notifications to 13 of RCom’s directors and senior management but had subsequently withdrawn the letters against everyone else. Without adhering to natural justice principles, it selectively continued the proceedings against Ambani.

The statement emphasised that Ambani had no involvement in the day-to-day operations or decision-making of RCom and had only been a non-executive director on the board until his resignation in 2019. The business further claimed that the bank denied him a personal hearing prior to making its decision and neglected to provide the required paperwork.

Legal and Regulatory Context

 “These actions are against established law and judicial precedents, as well as the RBI regulations issued in July 2024,” the representative stated. A committee of creditors headed by the State Bank of India and monitored by a resolution specialist is still in charge of RCom’s insolvency procedures. The Supreme Court and the National Company Law Tribunal are also considering the case. The letter further stated, “Ambani will pursue legal remedies and categorically denies all allegations and charges.”