Canara Bank Classifies Reliance Communications Loan Accounts as ‘Fraud’ Over Rs 31,580 Cr Loan Findings

Reliance Communications Limited has issued a regulatory filing dated March 06, 2026, addressed to the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Through the regulatory filing, it was informed that the company and its subsidiary, Reliance Telecom Limited (“RTL”), had received RCOM and RTL letters, both dated the same, i.e., February 27, 2026 (received on March 06, 2026), respectively, from Canara Bank, stating that the bank has classified the company’s accounts/borrowers/customers as “fraud” and decided to report the matter to the Reserve Bank of India (RBI) for the purpose of its inclusion in the Central Fraud Registry.

The Canara Bank asserted that the said classification has been made based on the findings from the forensic audit conducted by BDO India LLP for the review period between April 01, 2013, and March 31, 2017. The final report of the same was submitted on October 15, 2020, concluding that M/s Reliance Communications Ltd (RCOM), M/s Reliance Infratel Ltd (RITL), and M/s Reliance Telecom Limited (RTL) cumulatively had received about Rs 31,580 crore in loans from banks. A large portion of these funds was allegedly used to repay other loans or transferred to related and connected parties instead of being used for the purposes mentioned in the loan sanction terms.

The report further highlighted that the RCOM, RITL, and RTL have transferred the bank’s funds internally among themselves. The loan obtained by RITL was transferred from RITL to RCOM using RCIL. RITL had discounted bills of RCOM worth Rs 8514.70 crore and RTL worth Rs 1041.42 crore. Some transactions involved payments to entities with weak financial backgrounds, raising concerns that funds may have been routed or diverted.

Another major observation involved transactions with a company named Netizen Engineering Private Limited. The audit found that Reliance Communications had provided a capital advance of about Rs 5,525 crore to the said entity. Later, certain assets were transferred between companies, and the advance was written off against receivables. Investigators noted that Netizen’s financial capacity did not match the scale of the transactions, suggesting the possibility that it was used to move or syphon funds.

Cantra Bank had issued a show cause notice (SCN) dated September 22, 2025, to the company. The resolution professional of the company furnished a detailed reply to the notice via a representation dated October 16, 2025. However, the bank stated that the explanation cannot be considered since it was not satisfactory. It also cited a 2025 decision of the National Company Law Tribunal (NCLT), which clarified that banks can classify accounts as fraud even when a company is undergoing insolvency proceedings.

Reliance Communications and its subsidiary Reliance Telecom Limited are currently undergoing the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code. The company said the transactions mentioned by the bank relate to the period before the insolvency process began and that the matter is under legal review while resolution plans for the companies await approval from the tribunal.