SBI flags Reliance Communications' loan account for suspected fraud and funds diversion

Mumbai: State Bank of India (SBI) is classifying the loan account of bankrupt Reliance Communications as fraudulent, citing alleged diversion of funds in a case dating back to 2016, the telecoms company said.

Reliance Communications made the disclosure in a securities filing on Tuesday, where it said India's largest lender has decided to report its loan account as "fraud". The filing attached a June 23 letter from SBI detailing the reasons for the move.

State-run Canara Bank last year made a 'fraud' classification of Reliance Communications' loan account with it, a decision which was stayed by the Bombay High Court in February.

Reliance Communications is part of the group led by Anil Ambani, the brother of billionaire and one of Asia's richest men, Mukesh Ambani, who chairs the oil-to-telecoms conglomerate Reliance Industries. Reliance Communications disclosed in April that as of March 2025 it had a total debt of 404 billion rupees ($4.71 billion).

SBI's letter contained in the Reliance Communications filing also said it would report Anil Ambani to the Reserve Bank of India, in compliance with Indian banking regulations. Ambani was a director of Reliance Communications, which is currently undergoing insolvency proceedings.

The bank said it gave Anil Ambani and the company several chances in the past two years to respond to the allegations of fraud in loans taken out in 2016 from Indian banks that were subsequently classified as bad or non-performing, but found their replies "insufficient".

SBI and Anil Ambani did not immediately respond to Reuters' emailed requests for comment.

Under Indian banking laws once an account is reported as fraudulent it is referred to enforcement agencies for criminal action and the borrower is barred from securing any more finance from banks and other regulated financial institutions for an initial period of five years.

Reliance Communications said in the filing the insolvency proceedings protect it from any orders by any other authority and court of law.

"Legal advice is being sought on the way forward with respect to this development," the company said.