Canara Bank classifies RCom and its subsidiary as 'fraud' accounts

State-owned Canara Bank has classified Reliance Communications and its subsidiary, Reliance Telecom, as “fraud” accounts, the company said in an exchange notification on Friday.

 

According to the bank, the accounts were classified as fraudulent due to the non-utilisation of funds in accordance with the sanctioned terms, as well as the routing of the loan amount through Reliance Communications to Reliance Telecom for the purpose of settling liabilities to connected or related parties. Additionally, loans availed were invested in mutual funds and fixed assets, which were liquidated immediately to make payments to related and non-related parties.

 

The accounts were reported as “fraud” by the lender to the Reserve Bank of India (RBI) on September 18.

 

Canara Bank had sanctioned Rs 1,050 crore to Reliance Communications. The company slipped into “non-performing account” status in March 2017.

 

Subsequently, Ericsson India initiated the insolvency process against the company, leading to its admission into the Corporate Insolvency Resolution Process (CIRP) in May 2018.