Key Points
- State Bank of India (SBI) has officially declared the loan account of Anil Ambani’s bankrupt company, Reliance Communications (RCom), as ‘fraud’ after detecting alleged misuse of loan funds.
- SBI alleges RCom diverted sanctioned funds to other companies through questionable inter-company transactions and manipulated sales invoices.
- Anil Ambani’s legal team strongly opposes the move, claiming violations of Reserve Bank of India (RBI) guidelines and Supreme Court directives.
- RCom claims SBI’s action is “one-sided” and breaches principles of natural justice, as the company was not given full access to forensic audit reports or a fair chance to respond.
- SBI issued a Show-Cause Notice (SCN) in December 2023, but Ambani’s lawyers say there was no response from the bank for over a year.
- The legal team demands review and correction of the process, alleging procedural lapses and lack of transparency.
New Delhi: In a major development in India’s banking and corporate sector, the State Bank of India (SBI) has declared the loan account of Reliance Communications (RCom) the now-bankrupt telecom company led by Anil Ambani as ‘fraud’. The move, disclosed in a letter to the stock exchanges, could have significant legal and financial ramifications for one of India’s most high-profile business groups.
Why Did SBI Declare RCom’s Loan a Fraud?
According to SBI’s official communication, the decision was based on findings that RCom had wrongly transferred loan funds to other companies. The bank alleges that RCom misused inter-company transactions and manipulated invoices linked to sales, violating the terms under which the loans were sanctioned. These actions, according to SBI, constitute fraud under banking regulations and have prompted the bank to formally classify the account as such.
RCom and Anil Ambani’s Response
Reacting swiftly, Anil Ambani’s legal team sent a strongly worded letter to SBI, opposing the fraud declaration. The lawyers argue that:
- SBI’s action violates Reserve Bank of India (RBI) guidelines and Supreme Court instructions regarding the process for declaring loan accounts as fraud.
- RCom was not given full access to the forensic audit report only an incomplete copy was shared, denying the company a fair opportunity to defend itself.
- The company was not granted a proper personal hearing, which is required under principles of natural justice.
- SBI failed to respond to multiple communications from Ambani’s team for over a year, creating the impression that the matter had been resolved or dropped.
Timeline and Procedural Concerns
- December 2023: SBI issued a Show-Cause Notice (SCN) to Reliance Communications, asking the company to explain alleged irregularities.
- 2024-2025: According to Ambani’s lawyers, there was no further communication from SBI for more than a year, leaving the company in the dark about the investigation’s status.
- July 2, 2025: RCom received official notice that its loan account had been classified as fraud, catching the company by surprise.
Legal and Regulatory Implications
Declaring a loan account as fraud carries serious consequences for both the borrower and its promoters. It can lead to criminal investigations, restrictions on future borrowing, and reputational damage. The RBI has strict guidelines on the process, including the borrower’s right to be heard and to receive all relevant evidence requirements that Ambani’s legal team claims were not met in this case.
What’s Next?
- RCom is expected to challenge SBI’s decision in court, arguing procedural lapses and violation of natural justice.
- The case could set a precedent for how banks handle large corporate defaults and fraud investigations, especially involving high-profile business houses.
- Regulators and investors will be watching closely as the dispute unfolds, given its potential impact on India’s banking sector and corporate governance standards.
The SBI-RCom standoff has brought to light critical questions about transparency, due process, and accountability in India’s banking system. As Anil Ambani’s legal team prepares to fight the ‘fraud’ tag, the outcome of this case could have far-reaching implications for borrowers, lenders, and the broader financial ecosystem.
