The move comes days after Reliance Jio Infocomm (Jio), the designated buyer of Infratel’s assets, had moved the bankruptcy court to seek forensic audit reports that had marked the accounts of Infratel and RCom as “fraudulent”.
According to people in the know, the rushed affidavit was filed over fears that Jio may back out of its plan to buy Infratel for about Rs 4,000 crore due to the label, dealing a blow to lenders’ efforts to recover some of their money. SBI didn’t respond to queries.
“The bank feels that the fraud tag on Reliance Infratel could delay the resolution process and the quantum of recovery could fall further,” said a bank executive aware of the matter.
“There is also a fear that the sole buyer could back out because the findings of the forensic report could not be tabled in time when the NCLT gave its stamp of approval to the resolution plan of the company,” said the bank executive.
On May 27, Jio’s senior counsel had told the NCLT that it wanted to see the audit reports to understand why three Indian banks didn’t disclose that they had classified certain accounts of RCom and its units as fraudulent. The three banks were SBI, Union Bank of India and Indian Overseas Bank, which had backed a forensic audit that unearthed questionable transactions worth Rs 5,500 crore in the three Anil Ambani-led Reliance Group entities.
If the banks had the reports in October 2020 and the resolution plan for Infratel was approved in December that year, the counsel asked why the banks hadn’t brought them to the notice of the court or Jio.
SBI, the lead banker in the resolution process for RCom and its units Reliance Infratel and Reliance Telecom, will be hurt the most in case of further delays. It has an exposure of Rs 12,000 crore to RCom and another bankrupt telco, Aircel.
Jio sought the audit details through its unit, Reliance Project and Property Management Services, from Reliance Infratel’s committee of creditors (CoC), including SBI, Union Bank and Indian Overseas Bank. The resolution professional for RCom and its two units is Deloitte, which is also part of the CoC.
At the last hearing, the court directed Jio to furnish copies of its application to all parties, including the CoC and the resolution professional, and asked the respondents to file replies. The matter was next scheduled for hearing today.
Reliance Infratel, which has 43,000 towers and 172,000 km of fibre, and Reliance Telecom, which mainly houses fibre, are the two units of RCom that went bust along with their parent company.
RCom’s insolvency process is stuck amid separate legal tussles between asset reconstruction firm UVARCL and the Reserve Bank of India, and another one with the telecom department.
At the time of filing for bankruptcy, RCom had debt of Rs 46,000 crore, with 53 financial creditors — including local and foreign banks, non-banking financial companies and funds — seeking recompense.
RCom was forced to shut its wireless operations in late 2017, hurt by mounting debt and widening losses amid intense competition in the telecom sector after Jio’s entry in September 2016.