Shares of Reliance Communications (RCom), Reliance Infrastructure, and Reliance Power hit their 5% lower circuit on Monday after PSU lender Bank of India classified their loan accounts, along with those of directors, including Anil Ambani, as fraud.
The action follows a forensic audit conducted by BDO India for the period April 2013 to March 2017, which flagged diversion and misappropriation of funds.
On BSE, shares of Reliance Communications fell to their intraday low of Rs 1.76, Reliance Infrastructure slipped to Rs 275.05, and Reliance Power dropped to Rs 46.49.
Bank of India stated that the transactions under review showed “suspected fraudulent connotations.” The classification of these accounts as fraud has intensified investor concerns, triggering sharp sell-offs in Reliance Communications and Reliance Telecom, with both stocks locked at their lower circuit limits during the session.
Alongside Anil Ambani, the names of Manjari Ashok Kacker and Grace Thomas of Reliance Communications (RCom), as well as Satheesh Seth, Gautam Bhailal Doshi, Dagdulal Kasturchand Jain, and Prakash Shenoy of Reliance Telecom (RTL), were also tagged as fraud.
The audit found that part of a Rs 700 crore loan taken by RCom for capital and operational expenditure, as well as liability repayment, had been diverted.
Both companies, however, sought to reassure investors that the Central Bureau of Investigation’s (CBI) ongoing probe into an alleged Rs 2,929 crore bank fraud involving RCom has no impact on their day-to-day operations.
On Saturday, the CBI carried out search operations at industrialist Anil Ambani’s Mumbai residence and the offices of the now-insolvent RCom, following a complaint filed by State Bank of India. Ambani, through his spokesperson, denied all allegations and said he would contest any charges. He also stressed that the transactions under scrutiny date back over a decade, when he was serving only as a non-executive director, distancing himself from management decisions at the time. The spokesperson further noted that proceedings against five other non-executive directors in the same case have already been withdrawn.
Reliance Power and Reliance Infrastructure, in separate statements issued Sunday, clarified that the Bank of India’s classification of RCom’s loans as fraud has no bearing on their governance, financials, or business continuity. Both companies underlined that Ambani has not been on their boards for over three-and-a-half years and that they are independent listed entities with no financial or operational linkages to RCom.
They also emphasised that RCom has been under the supervision of a committee of creditors led by SBI and a resolution professional for six years, with the case pending before the National Company Law Tribunal (NCLT) and the Supreme Court.
Also read: Is Rs 4 crore enough for retirement corpus? Gurmeet Chadha gives simple calculation metric
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
The action follows a forensic audit conducted by BDO India for the period April 2013 to March 2017, which flagged diversion and misappropriation of funds.
On BSE, shares of Reliance Communications fell to their intraday low of Rs 1.76, Reliance Infrastructure slipped to Rs 275.05, and Reliance Power dropped to Rs 46.49.
Bank of India stated that the transactions under review showed “suspected fraudulent connotations.” The classification of these accounts as fraud has intensified investor concerns, triggering sharp sell-offs in Reliance Communications and Reliance Telecom, with both stocks locked at their lower circuit limits during the session.
Alongside Anil Ambani, the names of Manjari Ashok Kacker and Grace Thomas of Reliance Communications (RCom), as well as Satheesh Seth, Gautam Bhailal Doshi, Dagdulal Kasturchand Jain, and Prakash Shenoy of Reliance Telecom (RTL), were also tagged as fraud.
The audit found that part of a Rs 700 crore loan taken by RCom for capital and operational expenditure, as well as liability repayment, had been diverted.
Both companies, however, sought to reassure investors that the Central Bureau of Investigation’s (CBI) ongoing probe into an alleged Rs 2,929 crore bank fraud involving RCom has no impact on their day-to-day operations.
On Saturday, the CBI carried out search operations at industrialist Anil Ambani’s Mumbai residence and the offices of the now-insolvent RCom, following a complaint filed by State Bank of India. Ambani, through his spokesperson, denied all allegations and said he would contest any charges. He also stressed that the transactions under scrutiny date back over a decade, when he was serving only as a non-executive director, distancing himself from management decisions at the time. The spokesperson further noted that proceedings against five other non-executive directors in the same case have already been withdrawn.
Reliance Power and Reliance Infrastructure, in separate statements issued Sunday, clarified that the Bank of India’s classification of RCom’s loans as fraud has no bearing on their governance, financials, or business continuity. Both companies underlined that Ambani has not been on their boards for over three-and-a-half years and that they are independent listed entities with no financial or operational linkages to RCom.
They also emphasised that RCom has been under the supervision of a committee of creditors led by SBI and a resolution professional for six years, with the case pending before the National Company Law Tribunal (NCLT) and the Supreme Court.
Also read: Is Rs 4 crore enough for retirement corpus? Gurmeet Chadha gives simple calculation metric
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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