Union Bank declared the company's loan of ₹1,324 crore as fraud, after a forensic audit revealed significant irregularities.:

News Topical, Digital Desk : Union Bank of India has formally classified the loan accounts of both companies as " fraud ." The bank made this decision following a detailed forensic audit report and show-cause notices issued to the companies. The bank alleged that thousands of crores of rupees in bank loans were misused, and several transactions were found to be suspicious.

Let us tell you the matter in detail... Reliance Communications Limited (RCOM) and its subsidiary Reliance Telecom Limited (RTL) are once again in the news. Union Bank of India has declared the loan accounts of both the companies as 'fraud'. This action has been taken after several levels of investigation, forensic audit and notice given to the company.

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Loan facility of ₹1,550 crore, ₹1,324.86 crore outstanding - According to the filing, RCOM had availed various credit facilities from Union Bank in 2013 totaling ₹1,550 crore, of which ₹1,324.86 crore was declared NPA in 2017. The bank claims that the company did not comply with the loan conditions, leading to the account being classified as bad.

Forensic audit reveals: Misuse of loan. The forensic audit conducted by State Bank of India (by BOD India LLP) revealed several serious issues: Of the total ₹31,580 crore received from the bank, approximately 44% was used to repay old loans and 41% was sent to the group's affiliated companies. Approximately ₹6,265 crore of loan proceeds were transferred directly to the related companies. Several investments were made and immediately redeemed, raising suspicions that the actual use of the funds was outside banking terms.

Inter-company transactions raise suspicion - The investigation revealed that loan funds were constantly moving between RCOM, RTL, and RITL. RTL sent ₹1,783 crore from the amount received from the bank to RCOM. Funds were routed extensively using ICDs (Inter Corporate Deposits). A total of ₹41,863 crore worth of ICD transactions were found, a large portion of which went towards payments to related parties.

Questions also arise on the transactions of a company named Netizen - The audit found that an advance of ₹5,525 crore was given to Netizen, an affiliate of RCOM, and the value of the assets received in exchange for this was suspicious. In the eyes of the bank, this also indicates possible siphoning.

Show Cause notices were sent, but no response was received - Union Bank sent Show Cause Notices on October 28 and November 12, 2025. The notice was sent through speed post and email, but there was no response from the company. Then the Fraud Monitoring Group of the bank approved the decision to declare the loan accounts as fraud in its meeting on 3 December 2025.

Possibility of relief after NCLT approval due to being in CIRP - Both RCOM and RTL are in Corporate Insolvency Resolution Process (CIRP). During CIRP, some temporary protection is available under Sec 14 and 32A. But now the accounts of both the companies have been officially registered as 'fraud' in the banking records. This can have a big impact on the resolution process of RCOM and settlement of liabilities.