New Delhi: Reliance Communications (RCOM), currently under insolvency proceedings, on Tuesday disclosed that Union Bank of India has classified the loan accounts of both RCOM and its subsidiary Reliance Telecom Ltd (RTL) as ‘fraud’, citing findings from a forensic audit and non-response to multiple show-cause notices.
The bank, in letters dated December 4 and received by the company on December 8, said it has identified prima facie elements of fund diversion, irregular transactions, intra-group routing of loans and misuse of facilities, based on a forensic audit conducted by BDO India LLP. The accounts—part of a larger consortium lending arrangement—were earlier declared NPAs in June 2017, with dues of ₹1,324.86 crore at the time.
Union Bank’s Fraud Monitoring Group (FMG) reviewed the auditor’s findings and alleged that loan proceeds were used to repay unrelated entities, transferred across group firms, deployed into questionable investments, and routed through connected companies, including entities such as Netizen, with weak financials. The bank said show-cause notices issued in October and November 2025 elicited no response from the company.
Following the review, the bank formally classified the accounts of RCOM and RTL as fraud, and said the matter will be reported to the Reserve Bank of India and enforcement agencies for further investigation.
In its disclosure, RCOM said the alleged irregularities relate to the period prior to the commencement of its corporate insolvency resolution process (CIRP). The company noted that both RCOM and RTL are currently protected under Section 14 (moratorium) of the Insolvency and Bankruptcy Code (IBC), which halts proceedings against the entity, and Section 32A, which shields the corporate debtor and its new management from liability for past offences once a resolution plan is approved by the NCLT. A resolution plan for both companies has been approved by creditors and awaits NCLT clearance.
The company added that its resolution professional has already filed avoidance applications before the NCLT based on earlier transaction review findings, and that the treatment of any such liabilities will be governed by the final resolution plan. Legal advice is being sought on the next steps.