UCO bank classifies Reliance Communications' loan accounts as fraud

Reliance Communications Limited (RCOM) announced today that UCO Bank has classified its loan accounts as fraud, effective from September 26, 2025. The classification stems from an October 3, 2025 letter from UCO Bank, which concluded that RCOM failed to explain non-adherence to loan terms or irregularities. UCO Bank cited several reasons, including the utilization of loans to pay off other bank debts, which was not permitted and constituted diversion of funds.

A forensic audit revealed invoice financing/discounting for round-tripping of loans to and from related parties, with these transactions appearing to be misappropriated due to a lack of supporting documents. Furthermore, discrepancies totaling INR 13852.77 Crores were identified in the utilization of loans from multiple banks, indicating potential diversion for repayment of other banks' loans, transfers to related/connected entities, and investments. Additionally, RCOM obtained a loan of INR 469.45 Crores from Bank of Baroda, which was directly transferred back to RCOM and then routed to related entities and banks for loan payments.

RCOM is currently undergoing a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. A resolution plan has been approved by the committee of creditors and awaits approval from the National Company Law Tribunal. RCOM asserts protection under Section 14(1)(a) and 32A of the Code, shielding it from suits and liabilities for offenses committed prior to CIRP commencement. UCO Bank plans to report the account to RBI and lodge a complaint with law enforcement agencies.