Anil Ambani-led Reliance units say SBI's fraud tag on RCom loan has no impact on their operations
SBI has classified the loan account of Reliance Communications (RCom) as fraud diversion of sanctioned loan amounts to pay connected parties, inter-company loan transactions and investments and misutilisationon of sales invoices. The bank will take further action against the company and its former promoter director, Anil Ambani by reporting them to the Reserve Bank of India (RBI), according to a letter posted on the stock exchanges.
ALSO READ: RCom loan fraud: The one Reliance company that failed
In its detailed notice to the company SBI said after the Supreme Court order in March 2023 which said that promoters of companies have to be given a hearing before they are declared as fraud, the bank reversed its 'fraud' tag on RCom and its promoters.'As part of the re-initiation of the process of fraud identification in the account, SCNs were served to the borrower and its promoters, directors dated December 20, 2023 for giving an opportunity of hearing in adherence to the principles of natural justice before deciding on identification and reporting of account as fraud…' SBI said in its letter. Another notice with a forensic audit report was sent to the promoters, directors again in March 2024 and another one in September 2024. The resolution professional had replied to the notices from SBI in January 2024, saying that nothing should constraint the bank from pursuing any action against hr erstwhile directors, management or employees of the company for fraudulent or actions of omissions.
RCom has been under a corporate insolvency resolution process since 2019. In its statement, the company reminded investors that any loans linked to the period before insolvency must be handled within the resolution plan.RCom was at one point India's second-largest telecom operator. However, by 2019, the company was facing bankruptcy with billions of dollars in debt. It disclosed in April that as of March 2025, it had a total debt of 404 billion rupees ($4.71 billion). Besides management issues and intense competition, sectoral challenges such as price wars, heavy debt and plunging profitability which crippled India's telecom sector, also took their toll on RCom.The fall of an Ambani company to such depths was not foreseeable more than two decades ago, when RCom was launched, because the names 'Reliance' and 'Ambani' had become synonymous with success.
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