Following in the footsteps of the State Bank of India, Bank of India has officially classified the loan account of the insolvent Reliance Communications (RCom) as fraudulent. This classification, which includes its former director and tycoon Anil Ambani, along with other erstwhile directors Manjari Ashok Kacker and Grace Thomas, stems from alleged fund diversion related to a ₹700 crore loan granted in August 2016. The developments have also led to a significant Central Bureau of Investigation (CBI) inquiry, including searches at premises linked to RCom and Ambani's residence.

Bank of India initially extended a ₹700 crore loan to Reliance Communications in August 2016, intended for capital and operational expenditure, as well as the repayment of existing liabilities. However, a crucial irregularity surfaced when half of the sanctioned amount, disbursed in October 2016, was allegedly invested in a fixed deposit, a practice explicitly prohibited by the sanction letter. RCom officially disclosed, in a regulatory filing, that on August 22, it received a letter from Bank of India dated August 8, stating the bank's decision to classify the loan accounts as 'Fraud'. The company's subsidiary, Reliance Telecom Ltd, also received a similar classification.

This move by Bank of India mirrors a prior action taken by the State Bank of India (SBI) in June, which also cited misappropriation of bank funds through transactions violating loan terms. Based on a complaint from SBI, which claimed a substantial loss of ₹2,929.05 crore, the CBI initiated an investigation. The CBI conducted search operations at RCom's office in Navi Mumbai on August 23, and at Ambani's residence, for alleged offenses under Sections 120B, 406, and 420 of the IPC, and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. Various financial documents pertaining to the company and its subsidiaries were taken into possession during these searches.

In response to these grave allegations, a spokesperson for Anil Ambani issued a strong denial of all charges, stating that he would "duly defend himself." The spokesperson highlighted that the SBI complaint pertains to matters dating back over ten years and that Ambani, at the relevant time, served as a non-executive director with no involvement in the company's day-to-day management. Furthermore, it was noted that SBI had previously withdrawn proceedings against five other non-executive directors, leading to the assertion that Ambani had been "selectively singled out."

Under banking laws, the classification of an account as fraudulent mandates its referral to enforcement agencies for criminal action. Additionally, the borrower is barred from accessing fresh finance from banks and regulated institutions for a period of five years. RCom's financial distress became evident when Bank of India disclosed that the company's loan account turned into a Non-Performing Asset (NPA) on June 30, 2017, with an outstanding balance of ₹724.78 crore. Despite repeated follow-ups, the borrowers and guarantors failed to repay the dues. In April, RCom disclosed its total debt stood at ₹40,400 crore as of March, leading to its admission into insolvency and bankruptcy proceedings. The company is currently managed under the supervision of a Committee of Creditors, led by SBI and overseen by a Resolution Professional. The company clarified that the search operation is not expected to impact its financials or operations, as it is undergoing a corporate insolvency resolution process and is subject to protections under the IBC.

In light of the ongoing investigations, Reliance Infrastructure (RInfra) and Reliance Power issued separate statements to clarify their position. Both companies firmly stated that they are separate and independent listed entities with no business or financial linkage to Reliance Communications. They emphasized that Anil D. Ambani has not been on the Board of Reliance Power for over three and a half years, asserting that any action related to RCom has no bearing or impact on their governance, management, or operations. The companies reiterated their commitment to focusing on business plans and creating value for all stakeholders, while noting that the matter remains sub judice, pending before the NCLT and other judicial forums, including the Supreme Court, for the past six years.