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The Print
3 hours ago
- The Print
SBI to tag RCom loan account as ‘fraud', names Anil Ambani in report to RBI
Reliance Communications in a regulatory filing said that it has received a letter dated June 23, 2025 from the State Bank of India (SBI) to this effect. The move is expected to be followed by other lenders who have given loans to Reliance Communications Ltd (RCom). New Delhi, Jul 2 (PTI) State Bank of India (SBI) has decided to classify the loan account of beleaguered telecom firm Reliance Communications as 'fraud' and to report the name of its erstwhile director — Anil Ambani to the Reserve Bank of India (RBI). SBI has decided to report the loan account of the company as 'fraud' and to report the name of Anil Ambani (erstwhile director of the company) to the RBI, as per the extant RBI guidelines, it said. As per the RBI guidelines, after a bank classifies an account as 'fraud', the lender should then report the fraud to RBI within 21 days of detection and also report the case to CBI/Police. According to the filing, Reliance Communications and its subsidiaries received a total loan of Rs 31,580 crore from banks. SBI in the letter sent to RCom said, it has found deviation in utilization of the loans involving complex web of fund movements across multiple group entities. 'We have taken cognizance of the responses to our Show Cause Notice 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 RCL to the satisfaction of the bank,' it said. Accordingly, the letter said, the Fraud Identification Committee of the bank has decided to classify the loan account of RCL as fraud. As per the RBI guidelines, the penal provisions are applicable to the fraudulent borrower including the promoter director and other whole-time directors of the company. In particular, borrowers who have defaulted and have also committed a fraud in the account would be debarred from availing finance from banks, Development Financial Institutions, government owned NBFCs, etc, for a period of five years from the date of full payment of the defrauded amount. After this period, it is for individual institutions to take a call on whether to lend to such a borrower and no restructuring or grant of additional facilities may be made in the case of fraud accounts. As per the report of the Fraud Identification Committee out of the total loan, Rs 13,667.73 crore, about 44 per cent, was utilized for the repayment of loans and other obligations. An amount of Rs 12,692.31 crore, 41 per cent of total loan, was utilized to pay connected parties. According to the filing, Rs 6,265.85 crore was used for repaying other bank loans and Rs 5,501.56 crore was paid to related or connected parties which were not aligned with sanctioned purposes. Further, a Rs 250-crore loan from Dena Bank (meant for statutory dues) was not utilized as per the sanctioned use. The loan was diverted to RCom Group company Reliance Communications Infrastructure Ltd (RCIL) as an Inter-Corporate Deposit (ICD) and was later claimed to repay an External Commercial Borrowing (ECB) loan. The committee found that a loan of Rs 248 crore was sanctioned by IIFCL for meeting capital expenditure but RCom paid Rs 63 crore to Reliance Infratel Ltd (RITL) and Rs 77 crore to RIEL for repayment of loans. 'But instead of transferring the fund directly to these companies it was routed through RCIL, reason for that has not been given by management or by Anil Ambani. These (Dena Bank and IIFCL loan use) appear to be misappropriation of funds and breach of trust,' the report said. The committee observed potential routing of bank loans by RCom Group including mobile tower firm Reliance Infratel Ltd (RITL) telecom service company Reliance Telecom Ltd (RTL), Reliance Communications Infrastructure Ltd (RCIL), Netizen, Reliance Webstore (RWSL) etc. The report said RCom, RITL, and RTL engaged in ICD (inter-corporate deposit) transactions totaling Rs 41,863.32 crore of which only Rs 28,421.61 crore was traceable. RCom used a Rs 100-crore intraday limit to cycle funds through group entities including RWSL, RTL, RCIL multiple times in a single day. 'These transactions do not appear to be genuine or conducted in a normal course of business. It appears that RCom has utilized intra-day limits to finance RWSL to pay collection proceeds worth Rs 1,110 crore. 'As a result, debtors of RTL got reduced by that extent… transactions can be termed as manipulation of books of accounts through fictitious accounts,' the report said. The committee raised a question on funds transactions involving Netizens as 'an attempt of diversion of funds by manipulation of books of accounts through fictitious account/fictitious entries.' It is to be noted that RCom is under corporate insolvency resolution process (CIRP) pursuant to the provisions of the Insolvency and Bankruptcy Code, 2016. With effect from June 28, 2019, its affairs, business and assets are being managed by, and the powers of the board of directors are vested in, the Resolution Professional, Anish Niranjan Nanavaty, appointed by National Company Law Tribunal, Mumbai Bench, order dated June 21, 2019. The credit facilities or loans referred to in the letter from SBI dated June 23, 2025 pertain to the period prior to the CIRP of the company and are required in terms of the IBC, to be necessarily resolved as a part of a resolution plan or in liquidation, as the case may be. PTI PRS DP DRR This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Indian Express
3 hours ago
- Indian Express
Backed by strong profit growth, PSBs' FY25 dividend transfers up 166% in 4 years
Driven by robust growth in profitability, public sector banks (PSBs) have seen a 166 per cent surge in total dividend payouts to shareholders, including to the government, between 2021-22 and 2024-25. The total dividend paid by state-run banks to shareholders increased from Rs 13,170 crore in 2021-22 to Rs 34,992 crore in the financial year ended March 2025, data compiled by The Indian Express showed. As a result, the central government is also likely to see a jump of 160 per cent in dividend from public sector banks to Rs 22,773.96 crore in 2024-25 from Rs 8,761 crore paid in 2021-22 on account of its majority stake in these lenders. The Centre's stake in PSBs ranges from 57 per cent to 95 per cent as of end-March 2025. Among public sector banks, the government gets the highest dividend from State Bank of India (SBI), the country's largest lender, in which it holds 57.43 per cent stake. In 2024-25, the government is expected to receive Rs 8,149 crore as dividend from SBI. 'The 166 per cent increase in dividends (paid by state-run banks) also has to do with the way profitability has grown. So, if you look at it as a percentage of profit, the dividend distribution rate of public sector banks has been hovering between the 20-22 per cent of net profit,' said Saswata Guha, Senior Director, Financial Institutions (Banks), Fitch Ratings. 'Moreover, the Prompt Corrective Framework also prescribes clear conditions for financial soundness and dividend distribution, which banks must meet to pay dividends. Considering the sector's improved financial health, lenders also satisfy those conditions,' he said. Under the Prompt Corrective Action (PCA) framework, banks have to monitor and maintain certain minimum levels of common equity tier-1 ratio, net non-performing asset (NPA) ratio, and return on assets. Any breach of a risk threshold by a bank results in the invocation of the PCA, which leads to the imposition of a variety of business restrictions. In the last four financial years, state-run lenders' profit rose 144 per cent to Rs 1.78 lakh crore from Rs 73,142 crore in 2021-22. PSBs have become more profitable in the last four years on account of improvement in various financial metrics, including higher loan growth and reduction in NPAs, mainly due to loans being written off, analysts said. 'The improvement in asset quality and capital position after the massive recapitalisation of PSBs by the government has supported their loan book growth as well as earnings leading to consistent increase in dividend payments,' said Anil Gupta, Senior Vice President and Co Group Head – Financial Sector Ratings, Icra Ltd. As of end March 2025, gross NPAs of public sector banks declined to 2.8 per cent from 5.9 per cent as of March 2022, while net NPAs fell to 0.5 per cent from 1.7 per cent, according to the RBI data. Analysts believe state-run lenders may not be able to maintain the pace of dividend transfers to shareholders in 2025-26 due to a likely fall in profitability. The decline in profit may be on account of a lower net interest margin (NIM) following a 100 basis points (bps) reduction in the policy repo rate by the RBI so far in 2025. Whenever there is a reduction in the repo rate, banks' interest income from loans falls immediately, while their interest outgo on deposits readjusts with a lag. This puts pressure on their profit margins. 'As the loan book growth is expected to moderate further in 2025-26, which coupled with pressure on net interest margins is expected to translate in a muted earnings growth for the banking sector, including PSBs,' said Icra Ltd's Gupta. According to a recent report by CareEdge Ratings, NIMs of domestic banks is expected to decline around 20–25 bps in 2025-26 compared to 2024-25 due to a declining interest rate scenario, with yield on advances expected to fall more than the cost of deposits in the current financial year. Overall, profitability of banks may be impacted by around 12-15 bps, with estimated Return on Total Assets of 1.15 per cent in 2025-26, down from 1.34 per cent in 2024-25 due to pressure on NIMs and uptick in credit costs, the CareEdge report said. Banking analysts also said that qualified institutional placement (QIP) by certain public sector lenders — to meet the minimum public shareholding criteria in some cases — will lead to a reduction in the government's stake in these banks, resulting in lower dividend transfers in 2025-26 compared to 2024-25. The country's largest lender, SBI, is in the process of raising up to Rs 25,000 crore through the QIP route. Last month, state-run lender Union Bank of India received board approval to raise up to Rs 3,000 crore of equity capital through public issue or rights issue or private placement, including QIP. 'The moderate growth in earnings for banks coupled with expected dilution in shareholding of government upon the capital raise by few PSBs could translate in muted growth in dividends receipts of the government,' said Gupta from Icra Ltd.
The Hindu
3 hours ago
- The Hindu
SBI classifies RCom loan account as fraud, reports director Anil Ambani to RBI
In a major setback for Reliance Group chairman Anil D. Ambani, the State Bank of India (SBI) has decided to go after him by classifying its loan account of Reliance Communications Ltd. (RCom) as fraud. The country's largest public sector lender has also decided to report Mr. Ambani, the erstwhile director of RCom, to the Reserve Bank of India (RBI) seeking appropriate action as per the central bank's guidelines. The move follows a forensic audit by the bank and exchange of show-cause notices and responses spanning over a year. SBI, in a letter to RCom, intimated that its Fraud Identification Committee (FIC) had decided to classify the account as fraudulent and it had escalated the matter to the banking regulator for necessary action. The FIC's report has mentioned about significant irregularities, including fund diversion and violations of the terms and conditions of the loan. SBI's action is in line with the RBI's Master Direction on Frauds, which provides a framework to deal with entities involved in gaming the banking system. Mr. Ambani is expected to face regulatory and legal action including civil and criminal proceedings and the case might be handed over to the Central Bureau of Investigation (CBI) for further investigation. RCom, which had turned a non-performing asset (NPA), was admitted to the IBC process in May 2018, and as of March 2025, had a total debt of ₹48,216 crore. Under Section 32 A of the IBC, the company is protected from any action but its promoter faces liability and criminal proceedings. SBI's FIC on June 13, 2025 identified a consistent pattern of financial misconduct and found that RCom and its subsidiaries were engaged in found diversion and opeque transactions. The forensic audit had revealed large scale diversion of the bank's funds which were channelled through related entities, temporarily parked in mutual funds and fixed deposits and cycled via o tea day transactions. Mr. Ambani's lawyers have denied the allegations. His counsel, in response to SBI's letter to RCom said, 'State Bank of India's order referred in the RCom disclosure is shocking and has been passed ex-parte, and in violation of the principles of natural justice.' 'SBI's order is in direct contravention of various judgments of the Hon'ble Supreme Court and the Hon'ble Bombay High Court, as well as RBI guidelines,' he said. 'SBI has not even responded to Mr. Ambani's communication about the invalidity of the Show Cause Notice (SCN) for almost a year, and has not even provided the information forming the basis of their decision despite being repeatedly requested by Mr. Ambani, to enable him to respond to the SCN,' he said. 'SBI has also not allowed Mr. Ambani an opportunity of personal hearing to make submissions against its allegations,' he added. 'SBI has withdrawn the show-cause notice to other non-executive and independent directors of RCom. Mr. Ambani was also a non-executive director and not involved in the day-to-day affairs of RCOM, and has been wrongly so categorised,' he further said. Mr. Ambani is pursuing the matter as legally advised, he added.
