Punjab National Bank (PNB) has classified the loan account of Reliance Telecom Limited, a subsidiary of Reliance Communications Limited, as “fraud”, according to a regulatory disclosure filed by Reliance Communications on May 9, 2026. The company said the communication was received from PNB on May 8, 2026, pursuant to a letter dated April 28, 2026.
In its disclosure to stock exchanges, Reliance Communications stated that PNB’s Fraud Examination Committee had also decided to classify Smt. Grace Thomas, a non-executive non-independent director of RCOM and erstwhile director of Reliance Telecom, as “fraud” in connection with the account.
“This is to inform you that Reliance Telecom Limited (RTL), a subsidiary of Reliance Communications Limited (RCOM), has received the aforementioned letter from PNB, vide which, PNB has, inter alia, stated that ‘Fraud Examination Committee’ of PNB has decided to classify the loan account of Reliance Telecom Limited and Smt. Grace Thomas, Non-Executive Non-Independent Director of RCOM (in her capacity as erstwhile director of RTL), as ‘fraud’,” the exchange filing from Reliance Communications read.
According to the bank’s “reasoned order”, the amount involved in the account was stated at Rs 201.51 crore. PNB alleged multiple irregularities, including diversion and round-tripping of funds, fictitious debtor transactions, and routing of loans through related entities. The order cited findings from a forensic audit, which alleged that collections amounting to Rs 1,110.50 crore were circulated among Reliance group entities through a series of transactions that inflated turnover and balance-sheet figures.
The bank further alleged that Reliance Telecom transferred Rs 221.93 crore to Reliance Communications (RCOM) out of the loans received by RTL, part of which (Rs 110 crore) was allegedly invested in mutual funds. The forensic audit also flagged transactions involving several group and related entities, alleging diversion of funds and irregular journal entries.
PNB also cited forensic audit findings claiming that RCOM and its subsidiaries, including Reliance Telecom, received advances aggregating Rs 31,580 crore from member banks, of which Rs 13,667.73 crore (44 percent) was allegedly utilised for repayment of loans and obligations to banks and financial institutions, while Rs 12,692.31 crore (41 percent) was allegedly paid to connected parties.
“RCOM holds 78.8 percent share in RTL and RIIL holds 21.2 percent shares in RTL. Total payment by RTL to RCOM during the Review Period was INR 3,742.47 crores and total receipts were INR 537.83 crores. RTL promoters did not infuse any equity during the Review Period and all the contribution was in the form of short-term loans,” PNB’s reasoned order dated April 22, 2026, said.
The forensic audit additionally alleged that nearly 97 percet of the transactions examined were conducted through non-consortium banks, with only 3 percent routed through consortium banks.
“As per Forensic Auditor’s analysis of RTL’s transactions with Consortium and Non-Consortium Banks, out of total transactions, 97 percent of the transactions were with non-consortium banks and the balance 3 percent of transactions are with consortium banks,” the PNB’s order said.
Reliance Communications Cites Ongoing Insolvency Proceedings
Reliance Communications, however, maintained that both RCOM and Reliance Telecom are currently undergoing corporate insolvency resolution proceedings under the Insolvency and Bankruptcy Code, 2016. The company said resolution plans for both entities have already been approved by their respective committees of creditors and are awaiting approval from the National Company Law Tribunal (NCLT), Mumbai Bench.
The company further stated that the transactions referred to in PNB’s letter relate to the period prior to the commencement of the insolvency resolution process and are subject to adjudication under the Insolvency and Bankruptcy Code. It added that certain avoidance applications connected to the transactions have already been filed before the NCLT and remain sub judice.
RCOM also referred to protections available under Sections 14 and 32A of the Insolvency and Bankruptcy Code, asserting that upon approval of the resolution plans, the corporate debtors may receive immunity against liabilities for offences committed prior to the insolvency commencement date, subject to statutory conditions.
PNB Continues Fraud Action Against Some Former Directors
The PNB order noted that show-cause notices had been issued in March 2026 to Reliance Telecom and several former directors, including Satyendra Mohanlal Sarupria, Grace Thomas, Dagdulal Kasturchand Jain, Gautam Bhailal Doshi, Sateesh Seth and Prakash Shenoy. The bank stated that only Prakash Shenoy and Gautam Doshi had submitted responses.
In his response reproduced in the order, former director Prakash Shenoy denied involvement in operational or financial decisions, stating that he served as a non-executive director for compliance purposes and was not involved in the day-to-day management of the company. The response also challenged the forensic audit findings and raised objections on grounds of natural justice and disclosure of documents.
After examining replies and records, the committee decided not to pursue fraud classification against former directors Prakash Shenoy and Gautam Doshi, noting that both had served as independent or non-executive directors and had submitted communications from other banks, including SBI, IDBI Bank and Bank of India, where similar fraud proceedings had either been withdrawn or their names removed from RBI reporting systems.
However, the committee decided to proceed with fraud classification against former directors Sateesh Seth, Grace Thomas, Satyendra Mohanlal Sarupriya and Dagdulal Kasturchand Jain. The order stated that no responses to the show-cause notices were received from these individuals and that some of them had already been reported in earlier fraud filings with the Reserve Bank of India.
Found this useful? You can support us.
Support Telecomtalk
