Bank of Baroda, one of India's leading public sector banks, has taken a significant step by declaring the loan accounts of Reliance Communications Ltd. (RCom) and its former promoter, Anil Ambani, as 'fraud'. This development marks a crucial turn in the ongoing financial saga surrounding the once-prominent telecom company and its erstwhile director.

The Fraud Classification

According to a letter from Bank of Baroda to Reliance Communications, the bank has decided to classify the loan accounts of RCom and Anil Dhirajlal Ambani as fraudulent. This classification pertains to loans taken before RCom entered the corporate insolvency resolution process (CIRP).

RCom's Response

Reliance Communications, currently undergoing the CIRP under the Insolvency and Bankruptcy Code (IBC), 2016, has stated that the loans in question relate to the period before its insolvency proceedings began. The company asserts that these loans must be resolved as part of a resolution plan or through liquidation under the IBC.

Current Status of RCom

It's important to note that RCom is presently under the control of a resolution professional, Mr. Anish Niranjan Nanavaty. Anil Ambani is no longer a director of the company. A resolution plan for RCom has been approved by the committee of creditors and is awaiting approval from the National Company Law Tribunal (NCLT).

Legal Implications

RCom is seeking legal advice regarding Bank of Baroda's action. The company highlighted that during the CIRP, it is protected from the institution or continuation of any suits or proceedings against it, including the execution of any judgment, decree, or order in any court of law, tribunal, or arbitration panel.

Wider Investigation

This development comes amidst an ongoing investigation by the Enforcement Directorate (ED) into alleged loan fraud involving Anil Ambani's group entities. The ED has reportedly sought details from 12-13 banks regarding loans to Reliance Housing Finance, Reliance Communications, and Reliance Commercial Finance. The estimated amount involved in this alleged fraud is approximately Rs 17,000.00 crore.

Regulatory Reporting

Bank of Baroda has stated that it will report the fraud classification to various authorities as required by law, including the Reserve Bank of India (RBI). This reporting will be done in compliance with the RBI's Master Directions on Fraud Risk Management in Commercial Banks and All India Financial Institutions.

As this situation continues to unfold, it remains to be seen how it will impact the ongoing insolvency proceedings of Reliance Communications and the broader implications for the Indian banking sector's efforts to address non-performing assets.

Reliance Communications Limited (RCom) has announced that it has received a request from Reliance Capital Limited to reclassify its shareholding in the company. The request involves moving Reliance Capital's shares from the 'Promoter / persons belonging to Promoter Group' category to the 'Public' category.

Reclassification Request Details

According to the intimation filed by RCom with the stock exchanges, the reclassification request has been made under Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company disclosed this information in compliance with Regulation 31A(8)(a) of the Listing Regulations.

Current Shareholding Status

Interestingly, the filing reveals that Reliance Capital Limited currently holds no equity shares in Reliance Communications. The shareholding details provided in the intimation are as follows:

Next Steps

The resolution professional of Reliance Communications, Mr. Anish Niranjan Nanavaty, is seeking necessary legal advice regarding the reclassification request. This step is crucial as RCom is currently under corporate insolvency resolution process pursuant to the provisions of the Insolvency and Bankruptcy Code, 2016.

Company Status

It's worth noting that since June 28, 2019, Reliance Communications' affairs, business, and assets are being managed by the Resolution Professional, Mr. Anish Niranjan Nanavaty. The powers of the board of directors are vested in the Resolution Professional, who was appointed by the Hon'ble National Company Law Tribunal, Mumbai Bench.

The reclassification, if approved, would alter the shareholding structure of Reliance Communications, potentially impacting the company's ownership dynamics. Shareholders and market observers will be keenly watching for further developments on this matter.