Anil Ambani, the chairman of Reliance Group. Photo: AFP / The Times of India

After facing pressure from Chinese banks, embattled tycoon Anil Ambani is now getting heat from Indian banks over bad loans. While his Reliance Communications is undergoing bankruptcy proceedings, State Bank of India, India’s biggest bank, and Union Bank of India and Indian Overseas Bank have declared that the accounts held by the telecom company and its units Reliance Telecom and Reliance Infratel are fraudulent, Economic Times reports.

The three banks plan to carry out a deeper probe into the transactions of these companies. The latest allegations come a year after a forensic audit unearthed questionable transactions worth 55 billion rupees (US$750 million) in the three Anil Ambani-owned companies. After examining the transactions between May 2017 and March 2018, auditors found three large entries buried under hundreds of thousands of others that the banks suspect could conceal fund diversion, the daily added.

However, the Delhi High Court has ordered the banks to maintain the status quo until January 13, the date of the next hearing. But the court clarified that the federal government was free to investigate the matter independent of the order.

Reliance Communications was forced to shut its wireless operations in 2017 due to mounting debt and widening losses. It was one of the many companies that had to wind up operations after Anil’s elder brother Mukesh Ambani launched Reliance Jio in 2016. The predatory pricing by Reliance Jio led to a shakeout in the mobile phone services market and currently only two other private players remain – Bharti Airtel and Vodafone Idea.

The bankruptcy court had recently approved a plan by Mukesh Ambani-owned Reliance Digital Platform & Project Services to pick up the tower assets of Reliance Infratel for 49.75 billion rupees ($678 million). Another company, UV Asset Reconstruction Co Ltd, is awaiting approval by the National Company Law Tribunal for it to acquire assets of Reliance Communications and Reliance Telecom, which houses spectrum and fiber. Market analysts fear the recent action by the three banks and any subsequent investigation may delay the process.

At the time of the bankruptcy filing, Reliance Communications had a debt of 460 billion rupees ($6.27 billion) and 53 creditors, including local and foreign banks, had claimed 574 billion rupees ($7.83 billion), out of which 492 billion ($6.71 billion) was accepted by the resolution professional.

Previous cases

Anil Ambani is also being sued in a UK court by the Industrial & Commercial Bank of China over a personal guarantee he reportedly gave for a $925-million loan for Reliance Communications in 2012. While he had claimed that he had never knowingly given any personal guarantee, the London judge in charge of the case had described his evidence as “inexplicably incomplete, implausible and highly unlikely.”

During the hearing, Anil Ambani had said he owns “nothing meaningful” and had to sell all his jewellery to pay off legal fees for the ongoing case. He also denied media reports of owning a fleet of cars and said he was a “simple man of simple tastes” and owned just one car.

Last year, Anil Ambani risked a three-month jail term in the Ericsson payout case, but his billionaire brother Mukesh gave him a lifeline in the nick of time. His elder sibling made a payout of 4.5 billion rupees ($61 million) a day before the deadline set by India’s Supreme Court. The Swedish firm had earlier managed the Reliance Communications network and later took legal action over unpaid dues.

Wilful defaulters

The Reserve Bank of India has claimed that there are 1,913 wilful defaulters and they collectively owe 1.46 trillion rupees to banks ($19.91 billion) as of June 2020. In reply to an application filed under the Right to Information Act, the central bank said 264 defaulters have bad loans of one billion rupees and above and their unpaid dues amount to 1.08 trillion rupees ($14.73 billion).