Mumbai — The State Bank of India (SBI) has classified the loan account of Reliance Communications (RCom), the bankrupt telecom firm owned by Anil Ambani, as ‘fraud’, according to a stock exchange disclosure filed by the company on Tuesday.
This action follows a similar move by Canara Bank last year, which also declared RCom’s account fraudulent — a decision that was stayed by the Bombay High Court.
What It Means for RCom and Anil Ambani
Tagging an account as fraudulent under Indian banking regulations triggers serious consequences:
- Enforcement agencies are notified for criminal investigation.
- The borrower is barred from obtaining fresh finance from banks and regulated financial institutions for at least five years.
- The case is reported to the Reserve Bank of India (RBI) for compliance.
According to SBI, the decision to tag the account followed an investigation into suspected diversion of loan funds dating back to 2016, which were later declared non-performing assets (NPAs).
“We gave the company multiple opportunities over the last two years to provide adequate responses to fraud allegations, but their replies were found to be insufficient,” SBI stated in its notice.
RCom Responds: ‘We’re Protected Under Insolvency Law’
In response, Reliance Communications said that ongoing insolvency proceedings shield it from the effect of this classification, as per Indian bankruptcy law.
“Legal advice is being sought on the way forward with respect to this development,” the company said in its filing, reiterating that the Insolvency and Bankruptcy Code (IBC) grants protection against legal action from other authorities or courts during the resolution process.
Background: Anil Ambani’s Struggles Deepen
Reliance Communications, once a major player in India’s telecom sector, owes ₹40,400 crore as of March 2025, according to its April filings. It is part of Anil Ambani’s group, whose businesses have seen severe financial stress in recent years — in stark contrast to his brother Mukesh Ambani’s thriving Reliance Industries empire.
While Canara Bank’s fraud tag is still under judicial review, SBI’s move now adds pressure on both the company and its former leadership, potentially complicating its insolvency resolution process further.
The matter now appears poised for a legal showdown, with enforcement agencies, courts, and the RBI expected to weigh in as the case progresses.