Canara Bank Categorizes RCom Accounts as Fraud Amid Insolvency

Canara Bank has labeled accounts of Reliance Communications and its subsidiary, Reliance Telecom, as 'fraud' in a recent BSE filing. Although under insolvency resolution, RCom indicated the classification might not impact it. The resolution plan is pending NCLT approval, with legal advice being pursued.

Canara Bank has taken decisive action, identifying the financial accounts of Reliance Communications and its subsidiary, Reliance Telecom, as fraudulent. This move was disclosed in a recent filing to the Bombay Stock Exchange, stirring significant attention in the corporate world.

Despite being in the throes of a corporate insolvency resolution process under the Insolvency and Bankruptcy Code of 2016, RCom has downplayed the potential impact of this classification on its operations. A resolution plan has gained approval from the company's creditor committee but awaits a nod from the National Company Law Tribunal in Mumbai.

The BSE filing outlines that the credit facilities flagged by Canara Bank date back to before the initiation of the insolvency process. Legal proceedings have been temporarily shielded under Section 14(1)(a) of the Code, affording RCom critical protection as the situation evolves. Various financial discrepancies, such as the misuse of funds and non-compliance with sanctioned terms, prompted this classification.

(With inputs from agencies.)