In a major development that could have far-reaching implications, the State Bank of India (SBI) has officially labelled Reliance Communications’ loan account as “fraud”, citing serious irregularities in fund usage and violation of lending terms. The account, linked to industrialist Anil Ambani’s now-insolvent telecom firm, has come under intense scrutiny after forensic audits revealed suspected fund diversion and misuse of bank credit.
According to sources familiar with the matter, the decision was made following multiple show-cause notices issued to RCom between December 2023 and September 2024. SBI’s internal Fraud Identification Committee concluded that responses received from the company were insufficient to justify the financial discrepancies.
The loans under scrutiny amount to over ₹31,000 crore, and bank officials allege that a significant portion was redirected to repay unrelated debts or transferred to group entities. In one flagged instance, a ₹250 crore loan meant for network expansion was allegedly routed through a third-party firm and used to settle offshore borrowings—a clear breach of loan conditions.
SBI has now informed the Reserve Bank of India (RBI) and relevant investigative agencies. Under current banking regulations, such a fraud classification triggers a ban on fresh borrowing by the company and its promoters for at least five years, alongside potential criminal investigations.
Responding to the development, Reliance Communications stated that it was not granted a proper hearing and that the classification was carried out in an “ex-parte” manner. The company further argued that the matter is already before the National Company Law Tribunal (NCLT) as part of ongoing insolvency proceedings and should not be subjected to parallel scrutiny.
Anil Ambani, who served as a non-executive director during the period in question, has distanced himself from operational decisions. His legal team has termed the move premature and hinted at approaching the courts for relief.
This is not the first time a bank has raised red flags over RCom’s financial conduct. In 2024, Canara Bank had also marked the account as fraudulent, though the Bombay High Court later stayed that order.
With this fresh classification, SBI is expected to press for further legal action, potentially including a request to hold Anil Ambani personally accountable under the RBI’s “Red Flagged Accounts” framework. The case is likely to attract close attention as it unfolds in regulatory and legal circles in the coming weeks.
