Bank of Maharashtra classifies Reliance Communications' account as 'fraud'
Bank of Maharashtra has classified Reliance Communications' account as 'fraud' due to alleged misappropriation of funds. RCOM is under CIRP and expects protection under IBC.
The 'fraud' classification by a major bank carries significant reputational damage and potential legal ramifications, further complicating RCOM's already ongoing Corporate Insolvency Resolution Process, despite potential protections under the IBC.
The classification of Reliance Communications' account as 'fraud' by Bank of Maharashtra, citing misappropriation and diversion of funds, is a severe negative development for the company, indicating serious financial misconduct.
Reliance Communications Limited (RCOM) announced that it received a letter dated October 4, 2025 (received on October 24, 2025) from Bank of Maharashtra, classifying the company's account as 'fraud'. * The bank stated that the classification is due to "Misappropriation of funds and criminal breach of trust." This involves Letter of Credit discounting allegedly used for round tripping of loans to and/or from related parties and for repayment of outstanding LCs, indicating potential evergreening and diversion of funds. * One account (No. 60172697868) had an outstanding debit balance of ₹488.78 crore as of September 30, 2025, excluding interest. Another Letter of Credit facility (No. 60173474942) had a limit of ₹500 crore with a ₹0.00 outstanding balance. * RCOM is currently undergoing a Corporate Insolvency Resolution Process (CIRP) since June 28, 2019, with its affairs managed by a Resolution Professional. A resolution plan has been approved by the committee of creditors and is awaiting approval from the Hon'ble National Company Law Tribunal (NCLT). * The company clarified that the credit facilities mentioned in the letter pertain to the pre-CIRP period and are to be resolved as part of the resolution plan or liquidation. * RCOM stated that during CIRP, it is protected from legal proceedings under Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 (IBC). Furthermore, Section 32A of the IBC grants protection to a corporate debtor against liability for pre-CIRP offenses and prosecution if a resolution plan is approved by the NCLT and results in a change of management or control. * The bank's classification of the account as 'fraud' has been reported to the Reserve Bank of India (RBI), and consequences, including filing police/CBI complaints, are expected to follow as per RBI Master Directions. RCOM is seeking legal advice on the matter.
What to do with a filing like this
Reliance Communications Limited filed this with the NSE as a statutory disclosure, categorised under fraud/defaults disclosure. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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See the model portfoliosA plain-language summary of a public exchange filing by Reliance Communications Limited. Read the original for the full detail.