Reliance Communications Loan Account Marked as 'Fraud' by SBI During Insolvency

State Bank of India has classified the loan account of Reliance Communications as 'fraud', as the company has remained under insolvency proceedings since 2019. This development brings focus to compliance issues and regulatory actions surrounding large corporate loan defaults.

SBI Flags Reliance Communications Loan as 'Fraud'

In a formal communication dated June 23, 2025, State Bank of India informed Reliance Communications that its loan account has been officially classified as ‘fraud’. 

This action follows multiple previous show cause notices issued by SBI in December 2023, March 2024 and September 2024. 

According to the bank, Reliance Communications failed to adequately justify the breaches of loan terms, as well as irregularities in account conduct. Following this, SBI's fraud identification committee concluded that the account meets the criteria to be labelled as fraudulent. 

The bank plans to notify the Reserve Bank of India, along with the name of former promoter Anil Ambani.

History of Insolvency and Legal Protections

Reliance Communications has been in the corporate insolvency resolution process since 2019. The company clarified that the loans under scrutiny are from a period prior to the commencement of insolvency. Under the provisions of the Insolvency and Bankruptcy Code (IBC), once a resolution plan is approved by the National Company Law Tribunal, the company will receive immunity from prosecution for past actions under Section 32A of the IBC.

Past Action by Canara Bank and Legal Outcomes

In a related event, Canara Bank had similarly marked Reliance Communications’ account as fraudulent back in November 2024. However, this classification was challenged in court. 

In February 2025, the Bombay High Court stayed the bank’s action due to non-compliance with RBI guidelines regarding borrower hearings before such a declaration. The current move by SBI might face scrutiny under similar grounds, depending on how Reliance Communications and regulators respond.

Read More: SBI Targets Solarising 40 Lakh Indian Homes by FY2027! 

Resolution Plan Awaiting NCLT Approval

Creditors of Reliance Communications have already approved a resolution proposal. Now, the plan is pending final approval by the National Company Law Tribunal. The company underlined that all liabilities outlined in SBI’s notice would be settled through approved resolution or liquidation, as per legal protocols under the IBC framework.

Conclusion

SBI’s classification of Reliance Communications' account as fraud highlights continuing procedural complexities during insolvency resolution. While legal shields under the IBC may offer temporary protection, institutional actions by lenders can still impact business reputation and ongoing resolution efforts. The course of events will now depend on legal review and final decisions by the NCLT.

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