State-owned Canara Financial institution has categorised Reliance Communications and its subsidiary, Reliance Telecom, as “fraud” accounts, the corporate introduced in an change notification on Friday. The Firm is presently present process a company insolvency decision course of (CIRP) beneath the Insolvency and Chapter Code, 2016.
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Accounts Declared Fraud
“Firm and its subsidiary Reliance Telecom Restricted has acquired letters from Canara Financial institution, with topic “Classifying the Account as Fraud”, classifying accounts of Firm and its subsidiary, Reliance Telecom Restricted as ‘fraud’,” the corporate mentioned in an change submitting.
In keeping with the financial institution, the accounts had been categorised as fraudulent as a result of non-utilisation of funds in accordance with the sanctioned phrases. The mortgage quantities had been allegedly routed by way of Reliance Communications to Reliance Telecom to settle liabilities with linked and associated events. Moreover, loans availed had been invested in mutual funds and stuck belongings, which had been liquidated instantly to make funds to associated and non-related events.
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Alleged Fund Diversion and Misuse
Of the loans, Rs 6265.85 crores obtained from banks by way of loans had been utilised for compensation of different financial institution mortgage, whereas Rs 5501.56 crores obtained from banks by way of loans had been utilised for fee made to associated and linked events, Canara Financial institution famous in its letter dated November 5, 2024, to Reliance Communications.
Accounts Reported as Fraud to RBI
The accounts had been reported as “fraud” by the lender to the Reserve Financial institution of India (RBI) on September 18, 2024. Canara Financial institution had reportedly sanctioned Rs 1,050 crore to Reliance Communications. The corporate slipped into “non-performing account” standing in March 2017. Subsequently, Ericsson India initiated the insolvency course of towards the corporate, resulting in its admission into the CIRP in Could 2018.
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Insolvency Decision Course of
Reliance Communications famous that upon the approval of the decision plan for the corporate by the Nationwide Firm Regulation Tribunal (NCLT), the corporate can be deemed to have immunity towards any liabilities arising from purported offences dedicated previous to the graduation of the CIRP, together with these associated to any illegal transactions recognized within the forensic audit report.
So, the classification (“fraud”) just isn’t anticipated to have any influence on the Firm, the corporate assertion added.
