Public sector lender Canara Bank has classified the loan accounts of Reliance Communications Ltd (RCom) and its subsidiary Reliance Telecom Ltd (RTL) as “fraud” and will report the case to the Reserve Bank of India for inclusion in the Central Fraud Registry, even as the company is undergoing the corporate insolvency resolution process (CIRP).
In a regulatory disclosure, RCom said it received a letter dated February 27, 2026 from Canara Bank on March 6 stating that the accounts of RCom and RTL, along with their borrowers and customers, had been classified as fraud.
The bank also rejected the arguments presented by the Resolution Professional regarding moratorium protection during the insolvency proceedings.
The loan accounts had earlier been classified as non-performing assets (NPA) on September 29, 2017. Following this, the lead lender State Bank of India appointed BDO India LLP to conduct a forensic audit covering the period from April 1, 2013 to March 31, 2017.
The final report, submitted on October 15, 2020, highlighted several financial irregularities.
The audit found that RCom, Reliance Infratel Ltd (RITL) and RTL together received ₹31,580 crore in bank funding. Of this, ₹13,668 crore was used to repay loans and other obligations to banks and financial institutions, while ₹1,292 crore was paid to connected parties.
Investigators flagged diversion of funds from sanctioned purposes, with loan proceeds allegedly used to repay other bank borrowings, routed to related or connected entities and invested in financial instruments that were later liquidated for payments to various parties.
The report also pointed to routing of funds among group entities. Loans raised by RITL were moved through group companies and eventually used by RCom to repay bank liabilities or transferred to related parties.
For instance, of the ₹1,976 crore raised by RITL, ₹1,783.65 crore was utilised by RCom for loan repayments and transfers to connected entities.
Further, inter-company transactions involving large transfers of funds between RCom, RITL and RTL were identified, along with bill discounting transactions exceeding ₹9,500 crore.
The audit also raised concerns over dealings with Netizen Engineering Pvt Ltd, which received ₹5,525 crore in capital advances from RCom despite having limited financial capacity.
Funds linked to the sale of spectrum to Reliance Jio Infocomm Ltd were also routed through Netizen to entities with weak financial profiles, raising the possibility of fund siphoning, the report said.
A comparison of assets held by RCom, RITL, RTL and RCIL during the review period with those charged to lenders showed a mismatch. While outstanding charges stood at ₹49,111 crore as of March 2017, the total assets of the companies were only ₹26,163 crore, indicating that the value of assets available was significantly lower than the charges created.