Missed loan payments force banks to red flag Anil Ambani's Reliance Communications

Reliance Communications, the mobile phone operator company owned by Anil Ambani, has missed on its loan payments due more than 10 local banks, which has led to these banks marking it as special mention account (SMA).

SMA means loans with overdue interest payment from borrowers, marked SMA 1 if a loan isn't serviced within 30 days after falling due and SMA 2 for 60 days or more.

If the period of non-payment crosses 90 days, the loan becomes a non-performing asset (NPA).


At least 10 banks have marked loans to Reliance Communications as either SMA1 or SMA2, while a few others will have to mark them as an NPA after a fortnight, bank officials told ET.

"Post signing of binding documents for the Aircel and Brookfield transactions, RCom has formally advised all its lenders that it will be making repayment of an aggregate amount of Rs 25,000 crore from the proceeds of these two transactions, on or before Sept 30, 2017. The said amount will cover not only all scheduled repayments, but also include substantial pre-payments to all lenders on a pro-rata basis," said a spokesperson from RCom.

"RCom is presently engaged in discussions with its lenders to obtain their requisite consents for the two transactions and to refinance scheduled instalments falling due in the interim period up to Sept 30, to facilitate expeditious closing of both transactions in the best interests of all stakeholders," he added.

"Based on the large number of approvals already received for the two transactions and continuing good progress for the balance, RCom expects to meet its all debt repayment obligations in line with these plans, and substantially reduce its overall debt," the official continued.

It was in the first quarter of this year that the company had suffered a loss of Rs 966 crore, the second straight quarterly net loss which formed its first full fiscal net loss.

While announcing its performance for the last quarter of the fiscal, RCom had blamed the hyper-competition in the telecom industry, owing to entry of Jio, owned by Anil Ambani’s elder brother Mukesh Ambani. The company added that before Jio's entry, it had a net profit of Rs 90 crore a year back.

"For the first time in over 20 years, the telecom sector registered de-growth in revenues, leading to a reduction in the government's share in revenues, sharp drop in operating margins, accompanied by increased interest costs arising from a staggering industry debt burden, and higher depreciation and amortisation charges as a result of higher spectrum purchase costs," said the company in its earnings statement.