Union Bank of India starts fraud inquiry into Reliance Communications Loan

The Union Bank of India has initiated an investigation into a loan granted to Reliance Communications (RCom) due to suspected fraudulent activities. The bank, in accordance with Reserve Bank of India guidelines, has contacted RCom to provide a response regarding these alleged irregularities, as identified by a Forensic Auditor.

RCom is currently undergoing insolvency proceedings due to its inability to settle debts owed to vendors and other creditors. The company received a communication from Union Bank of India on August 7, stating that the bank had extended various credit facilities to RCom for two loan accounts. However, RCom failed to adhere to the agreed-upon terms, resulting in the loan accounts becoming irregular or non-performing assets (NPAs).

BDO India LLP, appointed by UBI as a forensic auditor, conducted an investigation and identified serious irregularities or anomalies in a report submitted on October 15, 2020. These findings raised concerns about potential fraudulent practices that required examination by a competent authority.

UBI has requested RCom to provide a response addressing the anomalies outlined by the auditors within a 15-day timeframe. Failure to receive a reply from RCom within the stipulated period will lead the bank to conclude that the company has no further input on the matter.

In the absence of a response, UBI will present the matter to an appropriate committee for a decision on subsequent actions, which may include categorizing M/s Reliance Communication Limited’s loan account as fraudulent or taking alternative measures, as outlined in the RBI’s guidelines on bank frauds.