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SBI flags Reliance Communications Loan Account for Fraud

State Bank of India has classified the Reliance Communications loan account as fraudulent. The bank cites alleged misappropriation of funds dating back to 2016 in an alleged case.

Reliance Communications disclosed the information in a filing of securities that included a letter from SBI dated June 23, detailing the reasons for the lender's decision.

According to Indian banking laws once a fraudulent account is reported, the matter will be referred to the enforcement agencies, who can take criminal action. The borrower may not obtain further financing from banks or other financial institutions regulated by the government for a period of upto five years.

Reliance Communications announced in April that the total amount of its debt in March was 404 billion rupees.

In compliance with Indian banking laws, SBI also stated in its letter that it would notify the Reserve Bank of India of Anil Ambani's financial transactions.

Ambani was the director of Reliance Communications and is following legal advice, said a Reliance Communications spokesperson on Wednesday.

Lawyers for Ambani asked SBI in a letter that was reviewed by to withdraw its order deeming the Reliance Communications loan account fraudulent. They also asked SBI to refrain from reporting Ambani to the RBI because SBI did not give him the chance to have a personal hearing.

Agarwal Law Associates said in the letter that Ambani had not received a response from the bank for nearly a year.

Reliance Communications' filing of securities late Tuesday stated that the company is protected from orders made by other authorities and courts.

SBI didn't respond immediately to an emailed comment request outside of business hours.

Reliance Communications' filing shows that the bank in its initial letter to Ambani and Reliance Communications said it had given them several chances to respond but still found their responses inadequate.

(source: Reuters)