SBI Flags Fund Misuse by Reliance Communication, Anil Ambani Named

The State Bank of India (SBI) has classified telecom company Reliance Communications’ (RCom) loan account as “fraud” and has reported the name of its former director, Anil Ambani, to the Reserve Bank of India (RBI), according to a regulatory filing made by the debt-ridden company.

RCom disclosed that it received a letter from SBI dated June 23, 2025, outlining the bank’s decision, in line with prevailing RBI guidelines. The move could trigger similar actions by other lenders involved in financing the company, which collectively extended loans worth ₹31,580 crore to RCom and its subsidiaries.

SBI’s decision follows the bank’s internal investigation, which reportedly uncovered significant irregularities in fund utilisation. According to SBI, a “complex web” of transactions was detected among various Reliance Group entities, raising serious concerns about fund diversion and mismanagement.

The letter states that despite RCom’s responses to an earlier show-cause notice, the explanations failed to justify deviations from loan terms and conditions or irregular conduct of the account. Consequently, SBI’s Fraud Identification Committee classified the loan account as fraudulent.

As per RBI norms, once a loan is tagged as fraud, the bank must notify RBI within 21 days and also alert law enforcement agencies such as the CBI or police. Additionally, penalties under RBI regulations apply to fraudulent borrowers and key management personnel, including promoter-directors.

Borrowers found guilty of both default and fraud are barred from availing fresh loans or credit facilities from banks, financial institutions, and government-owned NBFCs for a period of five years after full repayment of the defaulted amount. During this time, no loan restructuring or new credit line can be sanctioned for the fraudulent account.

SBI’s findings revealed that ₹13,667.73 crore (44%) of the total loans was used to repay previous loans and liabilities, while ₹12,692.31 crore (41%) was transferred to related parties—transactions not aligned with the intended purpose of the loans.

Notably, a ₹250-crore loan from Dena Bank, sanctioned for statutory dues, was instead redirected to group entity Reliance Communications Infrastructure Limited (RCIL) as an Inter-Corporate Deposit (ICD), and later claimed as repayment for an external commercial borrowing. Another ₹248-crore loan from IIFCL, meant for capital expenditure, was partially diverted to other group companies via RCIL, bypassing the approved route.

The committee flagged these as potential instances of fund misappropriation and breach of trust, citing the use of fictitious or circular transactions. It noted ₹41,863 crore worth of inter-corporate deposit transactions between RCom, RCIL, Reliance Infratel Ltd (RITL), and Reliance Telecom Ltd (RTL), of which ₹28,421 crore could be traced.

RCom also allegedly misused a ₹100-crore intraday limit to rapidly cycle funds through group firms multiple times in a single day, helping reduce outstanding dues in company books. Investigators said these movements were not in line with normal business operations and constituted manipulation of financial records.

The report further highlighted questionable fund movements involving a firm called Netizens, suggesting book manipulation using fictitious accounts.

It is important to note that RCom has been under the Corporate Insolvency Resolution Process (CIRP) since June 28, 2019. The company's affairs are currently overseen by Resolution Professional Anish Niranjan Nanavaty, appointed by the National Company Law Tribunal (NCLT), Mumbai. The loans and credit facilities flagged by SBI pertain to the period prior to the initiation of insolvency proceedings.

RCom’s latest regulatory filing reaffirms that the flagged loans and associated issues must be addressed through a resolution plan or liquidation under the provisions of the Insolvency and Bankruptcy Code, 2016.

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