On July 2, 2025, Reliance Communications (RCom) disclosed that State Bank of India (SBI) has classified one of its long-standing loan accounts as fraudulent. Moreover, SBI intends to report former director Anil Dhirajlal Ambani to the Reserve Bank of India (RBI). Here’s what you need to know.
What SBI Found
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Date of Letter: June 23, 2025 (received June 30).
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SBI’s Fraud Identification Committee (FIC) flagged the account due to suspected fund diversion and breaches of loan agreements, based on forensic audits and multiple show-cause notices dating from December 2023 to September 2024.
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As required by law, SBI will report both the loan account and Anil Ambani’s name to the RBI.
What This Means
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The flagged loans go back to pre-2016—before RCom entered insolvency in 2019.
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Once an account is marked fraudulent under RBI rules, it’s referred to enforcement agencies, and the borrower is barred from bank financing for five years.
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SBI states that fund usage didn’t align with sanctioned terms—like routing funds through group companies to repay external debts instead.
Reliance Communications’ Response
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The company is currently under a Corporate Insolvency Resolution Process (CIRP) since 2019, with a resolution plan approved by creditors and awaiting NCLT approval.
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RCom argues it is shielded under IBC Section 14(1)(a) and 32A, meaning no legal suits related to pre-CIRP events can be filed while CIRP is underway—and immunity will follow plan approval.
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The company has said it is seeking legal counsel to determine its next move .
Debt Details & Broader Context
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RCom and its subsidiaries have borrowed a total of ₹31,580 crore from banks.
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Around 44% of this debt was used to repay banks; nearly 41% was routed to connected or related entities, raising misappropriation concerns.
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This isn’t SBI’s first such move—Canara Bank also tagged the same account as fraud in Nov 2024, though the decision was stayed by the Bombay High Court.
Why This Matters
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Regulatory consequences: Fraud classification means possible criminal investigations and a five-year banking ban.
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Impact on resolution process: While CIRP protection currently shields RCom, the fraud label could affect negotiations with creditors after plan finalization.
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Investor and market sentiment: RCom shares were already trading at around ₹1.57, down nearly 99% from highs—this latest development may further dampen sentiment.
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Precedents matter: If regulatory authorities proceed, it could set a tone for how loan misusage is treated in large insolvency cases.
The Road Ahead
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Will SBI file a police complaint or start enforcement proceedings? Watch for SBI’s next step.
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How will the NCLT view the fraud allegation in the final CIRP resolution?
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Will other banks follow SBI’s actions and flag more loans as fraud?
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What legal routes will RCom pursue to challenge or contain the fallout?
Final Takeaway
SBI’s decision to flag RCom’s loans as fraudulent marks a major escalation in the regulatory scrutiny of bank credit misuse—a concern that could affect RCom’s restructuring path. Though CIRP protections exist, the coming months could involve intense scrutiny and legal battles.
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