Debt woes hurt RCom as more than 10 lenders fear missed loan repayments

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26 Aug, 2025 12:21

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Amid the ongoing tariff wars in the telecom sector, Anil Ambani-owned Reliance Communications may be in a tough spot as it has defaulted on its loan servicing obligations with more than 10 local banks, reports The Economic Times.

The report says that some banks have even listed their exposure to Reliance Communications as "special mention account" in their assets.

Special Mention Accounts (SMA) are those assets/accounts that show symptoms of bad asset quality in the first 90 days itself.

It is further divided into three categories.

1) SMA-0: Principal or interest payment not overdue for more than 30 days but account showing signs of developing stress.

2) SMA-1: Where principal or interest payment overdue between 31-60 days.

3) SMA-2: Where principal or interest payment overdue between 61-90 days.

A bank official was quoted as saying that the loans to Reliance Communications have been flagged as SMA-1 or SMA-2 by 10 banks in India.

Some banks will have to treat the account as a non-performing asset (NPA) after a fortnight, another banker was quoted as saying.

For the quarter ending March 31, 2017, the company had suffered a loss of Rs 966 crore. It was the second consecutive loss-making quarter which led to its first full fiscal net loss. At the end of FY17, RCom had a debt of around Rs 42,000 crore which it intends to reduce through its deals with Aircel and Brookfield, to whom RCom is selling 51 percent stake in its tower unit Reliance Infratel for Rs 11,000 crore.

A RCom spokesperson said:"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 September 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."

The company is currently engaged in discussions with banks to obtain their requisite consents for the two transactions and to refinance scheduled installments falling due in the interim period up to September 30, "to facilitate the expeditious closing of both transactions in the best interests of all stakeholders," he said.

As the majority of approvals have been received for the above mentioned two transactions and there is a good progress for obtaining the remaining, RCom expects to meet all its debt repayment obligations in line with these plans and looks to substantially reduce its overall debt, he further added.