SBI classifies RCom loan account as fraud; reports Anil Ambani to RBI

State Bank of India (SBI), the country’s largest lender, has classified the loan account of the insolvent telecom firm Reliance Communications (RCom) as “fraud” and reported its former promoter and director, Anil Ambani, to the Reserve Bank of India (RBI). This decision, conveyed in a letter dated June 23, 2025, follows an internal fraud identification committee’s findings.

SBI’s Allegations: According to SBI, a significant portion of the Rs 31,580 crore borrowed by RCom and its subsidiaries from banks, specifically Rs 12,692.31 crore (about 41% of the total), was allegedly diverted to “connected parties” through complex inter-group transactions, rather than being used for sanctioned purposes or for repaying other bank loans. Only Rs 6,265.85 crore was used for debt repayment.

The bank highlighted several specific instances of alleged fund misuse:

• Rs 5,501.56 crore was paid to related entities without aligning with the sanctioned loan objectives.
• A Rs 250 crore loan from Dena Bank, intended for statutory dues, was reportedly diverted to an RCom group firm, Reliance Communications Infrastructure (RCIL), as an inter-corporate deposit and later claimed to have repaid an external commercial borrowing.
• Rs 248 crore sanctioned by IIFCL for capital expenditure was partially used to pay Rs 63 crore to Reliance Infratel (RITL) and Rs 77 crore to RIEL for loan repayment, routed through RCIL without clear justification.
• The report also flagged inter-corporate deposit (ICD) transactions totaling Rs 41,863.32 crore between RCom, RITL, and Reliance Telecom (RTL), of which only Rs 28,421.61 crore was traceable.
• RCom reportedly used a Rs 100 crore intraday limit to cycle funds multiple times a day through group entities like Reliance Webstore (RWSL), RTL, and RCIL, which SBI deemed as “manipulation of books of accounts through fictitious accounts.”

SBI stated that RCom’s responses to its show-cause notice were insufficient in explaining the irregularities and non-adherence to loan terms.

RCom and Anil Ambani’s Defense: In response, RCom, which has been under the National Company Law Tribunal (NCLT) process since June 28, 2019, asserted its right to seek legal remedies. The company argued that SBI had not provided a proper personal hearing before classifying the account as fraud, a requirement mandated by a March 28, 2023, Supreme Court order. This apex court ruling, based on the principle of audi alteram partem (hear the other side), ensures borrowers receive an opportunity to present their case before such a severe classification, which can lead to criminal proceedings and borrowing restrictions. The RBI subsequently incorporated this ruling into its revised guidelines.

Anil Ambani’s legal counsel also claimed that SBI’s order was passed ex-parte, violating principles of natural justice, and that the bank failed to respond to communications or provide information forming the basis of its decision, thus depriving Ambani of a fair opportunity to respond. The counsel further contended that Ambani, as a non-executive director not involved in daily operations, was wrongly named, while show-cause notices to other non-executive directors were withdrawn.

This move by SBI is expected to prompt other lenders to RCom to follow suit in classifying their loan accounts as fraudulent.

Also See: Amount involved in loan frauds detected in FY24 falls 52%