No impact on biz: RInfra, RPower after SBI's 'fraud' tag on RCom account

Reliance Infrastructure and Reliance Power assert that SBI's classification of Reliance Communications' loan account as fraud will have no impact on their business, financials, or stakeholders

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Reliance Infrastructure (R-Infra) and its subsidiary Reliance Power (R-Power) have said that the recent move by the State Bank of India (SBI) to classify the loan account of Reliance Communications (R-Com) as “fraud” will not affect their business operations, financial performance, shareholders, employees, or any other stakeholders.

 

R-Infra and R-Power are separate and independent listed entities with no business or financial linkage to R-Com, both companies said in separate stock exchange filings on Thursday. 

Further, Anil Ambani is not on the board of R-Infra and R-Power. 

Accordingly, any action taken against R-Com has no bearing or impact on the governance, management, or operations of R-Infra and R-Power, the two companies claimed. 

 

On Wednesday, R-Com disclosed to the exchanges that the SBI has decided to classify the company’s loan account as “fraud” due to irregularities in the conduct of the account.

 

The SBI is also set to report both the account and Ambani, a director at R-Com, to the Reserve Bank of India (RBI).

 

“We have taken cognisance of the responses (wherever received) to our show-cause notice (SCN), and after due examination of the same it is concluded that sufficient reasons have not been provided by the respondent, to explain the non-adherence to the agreed terms and conditions of the loan documents or the irregularities observed in the conduct of the account of Reliance Communications to the satisfaction of the bank,” SBI said in a letter to RCom on June 23, which the company received on June 30.

 

The company has, however, clarified that the classification of “fraud” by SBI is not expected to have any impact on it and that it is seeking legal advice on the same.

 

Besides, R-Com is undergoing a corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016. A resolution plan has been approved by the committee of creditors of the company and is presently awaiting approval of the National Company Law Tribunal, Mumbai Bench.

 

A meeting of the committee of the company’s creditors has been scheduled to be on Friday.