Reliance Communications (RCOM) and its subsidiary Reliance Telecom Limited (RTL) have been classified as fraudulent accounts by multiple banks, including Union Bank of India and Bank of Maharashtra. These decisions come amidst ongoing financial troubles for the telecom company, which has been under corporate insolvency resolution process since June 2019.

Key Findings

The banks' classifications are based on forensic audits that revealed:

• Union Bank of India identified misutilization of Rs. 1,324.86 crores in bank loans for unauthorized payments to connected parties
• Bank of Maharashtra found misuse of Letter of Credit (LC) discounting for round-tripping of loans to related parties
• Utilization of funds for repayment of outstanding LCs, potentially indicating evergreening of loans
• Circular routing of funds between RCOM and its subsidiary Reliance Infratel Limited (RITL) amounting to Rs 2,779.38 crores

Regulatory Actions and Implications

• Union Bank of India has classified the accounts of both RCOM and RTL as fraud
• Bank of Maharashtra has reported the matter to the Reserve Bank of India (RBI)
• Bank of Maharashtra plans to file police/CBI complaints as per RBI directions
• RCOM is currently protected under the Insolvency and Bankruptcy Code (IBC) against liabilities for offenses committed prior to the insolvency process

RCOM's Current Status

• Both RCOM and RTL are currently under corporate insolvency resolution process
• Resolution plans for both companies are awaiting approval from the National Company Law Tribunal (NCLT)
• The company may receive protection under Section 32A of the IBC against prosecution for offenses committed before the insolvency process, once the resolution plan is approved

Company's Response

According to the LODR data, RCOM has acknowledged receipt of the fraud classification letter from Bank of Maharashtra. The company stated:

• The credit facilities in question pertain to the period before the Corporate Insolvency Resolution Process (CIRP)
• These facilities will be resolved as part of the resolution plan or in liquidation, as per the IBC
• RCOM is protected from suits/proceedings during the CIRP under Section 14(1)(a) of the IBC
• The company is seeking legal advice on the way forward regarding this development

These developments add another layer of complexity to RCOM's ongoing financial restructuring and highlight the challenges faced by the Indian telecom sector in recent years.

Reliance Communications Limited (RCom) and its wholly-owned subsidiary, Reliance Communication Infrastructure Limited (RCIL), are facing a comprehensive investigation by the Serious Fraud Investigation Office (SFIO), as ordered by the Ministry of Corporate Affairs (MCA). This development marks a significant turn of events for the telecommunications company, which is already undergoing corporate insolvency resolution process.

Investigation Details

The SFIO investigation, ordered under Section 212(1)(c) of the Companies Act, 2013, covers an extensive period from the financial year 2008-09 to 2023-24. The companies have been directed to provide a wide range of information and documents by November 28, 2025, including:

• Detailed financial statements
• Bank account information
• Loan and investment details
• Internal audit reports
• Corporate governance records

Company's Response

In response to the investigation, RCom has stated that it will extend full cooperation to the authorities and comply with the requirements set out in the notice. The company's management has emphasized that since only information and details are being sought, they do not expect any impact on business operations, shareholders, employees, or other stakeholders.

Regulatory Disclosure

RCom, in compliance with regulatory requirements, has made the necessary disclosures to the stock exchanges. The company has filed the information under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Current Status of RCom

It's important to note that Reliance Communications Limited is currently under corporate insolvency resolution process pursuant to the provisions of the Insolvency and Bankruptcy Code, 2016. Since June 28, 2019, the company's affairs, business, and assets are being managed by the Resolution Professional, Mr. Anish Niranjan Nanavaty, appointed by the National Company Law Tribunal, Mumbai Bench.

Market Implications

While the full implications of this investigation are yet to be seen, it adds another layer of complexity to RCom's ongoing financial challenges. Stakeholders will be closely watching how this investigation unfolds and its potential impact on the resolution process.

The SFIO's extensive probe into RCom and RCIL underscores the regulatory scrutiny faced by major corporations in India's telecommunications sector. As the investigation progresses, it may provide insights into the financial practices of the company over the past decade and a half.