Canara Bank Flags Reliance Telecom Loans as 'Fraud', Orders RBI Reporting

Reliance Communications Limited (RCOM) subsidiary Reliance Telecom Limited (RTL) faces renewed scrutiny as Canara Bank has classified its credit facilities as 'fraud'. A letter dated February 27, 2026, issued by the bank and received by RCOM on March 02, 2026, directed RCOM to report the matter to the Reserve Bank of India (RBI) for inclusion in the Central Fraud Registry.

This action was taken despite both RCOM and RTL being under the Corporate Insolvency Resolution Process (CIRP). Canara Bank found the arguments presented by the Resolution Professional (RP) regarding moratorium protection to be untenable.

Reader Takeaway: Ongoing CIRP faces renewed 'fraud' tag; RBI registry reporting looms.

What just happened (today’s filing)

Canara Bank has formally classified the credit facilities extended to Reliance Telecom Limited (RTL), a subsidiary of Reliance Communications Limited (RCOM), as 'fraud'.

This classification has prompted Canara Bank to instruct RCOM to report RTL to the Reserve Bank of India (RBI) for entry into the Central Fraud Registry.

The bank's decision came despite the ongoing Corporate Insolvency Resolution Process (CIRP) for RCOM and RTL, indicating the bank's stance on the validity of moratorium protections in this context.

RTL's sanctioned term loan facilities amounted to ₹10,000.00 lakh (₹100 crore).

Why this matters

This 'fraud' classification by a major bank, even amidst insolvency proceedings, significantly tarnishes the financial reputation of both RTL and RCOM.

It introduces potential complications for the ongoing resolution plans, as the bank's assertion of 'fraud' could influence creditor sentiment and regulatory actions.

The bank's dismissal of the RP's arguments regarding moratorium protection may also weaken RCOM's legal defenses during the CIRP.

The backstory (grounded)

Reliance Communications (RCOM) has a protracted history of financial distress, having filed for bankruptcy in February 2019 following unsustainable debt levels, reportedly around ₹500 billion at the time. The company has been under Corporate Insolvency Resolution Process (CIRP) since June 2019, managed by a Resolution Professional (RP) appointed by the National Company Law Tribunal (NCLT).

While Canara Bank classified RCOM and its subsidiary's accounts as 'fraud' in late 2024, a significant development occurred in July 2025 when the bank withdrew this classification following intervention and a stay by the Bombay High Court. The court had questioned the bank's adherence to mandates requiring a borrower's hearing before such a declaration, highlighting procedural issues. Despite this withdrawal, the current filing indicates a renewed or continued concern from Canara Bank as of February 2026.

Anil Ambani, chairman of the Reliance Group, has faced extensive legal and financial challenges, including a five-year ban from securities markets in August 2024 for alleged fraudulent schemes. RCOM's debt burden remains substantial, reportedly around ₹40,410 crore by December 2025.

What changes now

• The 'fraud' tag by Canara Bank escalates regulatory risk for RCOM and RTL.
• Reporting to the RBI's Central Fraud Registry can trigger further scrutiny.
• Creditor confidence in the resolution process may be affected.
• The bank's stance on moratorium protection could impact legal arguments in CIRP.

Risks to watch

• Regulatory: Inclusion in the RBI's Central Fraud Registry could impose restrictions and increase compliance burdens.
• Legal: The bank's assertion that moratorium protection arguments are untenable may weaken RCOM's legal standing in CIRP.
• Financial: A 'fraud' classification can severely damage reputation and complicate future financial dealings or resolution efforts, even if previously withdrawn by the bank.

Peer comparison

Reliance Communications (RCOM) operates in a sector that has seen significant financial stress. Competitors like Aircel and MTNL have also faced severe debt defaults and financial difficulties, leading to bankruptcy or strained operations.

Aircel defaulted on its debt obligations and was downgraded to a 'default (D)' grade by CARE Ratings. MTNL has also defaulted on loan repayments exceeding INR83 billion, with its accounts classified as NPAs.

In contrast, market leaders like Bharti Airtel have demonstrated greater financial resilience and market strength, maintaining robust financials and market capitalization, underscoring the varied outcomes within the Indian telecom industry.

Context metrics (time-bound)

• The total loan utilized by RCOM, RITL, and RTL cumulatively reached ₹31,580 crore, with ₹12,692.31 crore being used for payments to connected parties as per the filing.
• As of March 31, 2017, total charges on assets stood at ₹49,111.47 crore against total assets of ₹26,163.43 crore, indicating a significant asset-liability mismatch prior to insolvency.

What to track next

• Any official directives or actions from the Reserve Bank of India (RBI) regarding the Central Fraud Registry.
• The outcome of RCOM's Corporate Insolvency Resolution Process (CIRP) and the National Company Law Tribunal's (NCLT) decision on the approved resolution plan.
• Further legal interpretations regarding the applicability of moratorium and Section 32A immunity under the Insolvency and Bankruptcy Code in light of the bank's stance.
• The implications of this renewed 'fraud' classification on RCOM's ability to finalize its resolution or secure future financial arrangements.