Anil Ambani’s counsel terms SBI’s ‘fraud’ tag on RCom account as ‘shocking’, cites regulatory overreach

After State Bank of India’s move to reportedly classify Reliance Communications’ loan account as “fraud”, legal counsel representing businessman Anil Ambani–chairman and managing director of Reliance Group–has strongly objected to what it described as an “ex-parte order” issued by the PSU lender’s Fraud Identification Committee (FIC). In a letter dated July 2 and addressed to top SBI officials including its chairman Challa Sreenivasulu Setty, the RCom counsel said the move comes nearly a year after the lender failed to respond to the company’s last communication.

The matter relates to SBI’s move to classify the RCom account as fraud and report Ambani to the RBI, raising concerns around procedural fairness and regulatory consistency. The action was taken through an ex-parte order–such orders are issued without a hearing–and based on a 2020 forensic audit related to a 2016 loan, despite no recent urgency or engagement from the bank for nearly a year.

Mentioning an earlier communication sent to SBI on October 21, 2024, the RCom counsel stated that the lender’s show cause notice (SCN), dated December 20, 2023, was issued under rules that were later fully replaced by revised RBI Master Directions on July 15, 2024. Since the earlier rules no longer apply, RCom had requested SBI to withdraw the SCN, said the Reliance Group company’s counsel. As SBI did not respond for nearly a year, the counsel said its client, RCom, believed in good faith that the PSU bank had accepted this position and did not plan to take the matter further.

Calling the development “unexpected and procedurally flawed”, RCom’s legal team noted that SBI’s December 2023 show cause notice was issued under an earlier version of the RBI’s master directions. These ones that were completely superseded by the revised RBI Master Directions issued on July 15, 2024. On that basis, RCom had requested the withdrawal of the SCN back in October 2024.

“In light of the bank’s prolonged silence of almost one year, our client was under the bona fide belief that the matter had been settled and the bank had accepted our client’s position,” the RCom counsel noted.

The representation further highlighted that in similar cases, allegations against other noticees had been dropped on the same grounds. “Our client, being similarly placed, must also be extended the same relief,” it said, adding that Ambani was a non-executive director on RCom’s board and was not involved in daily operations–which were managed by the company’s key managerial personnel (KMPs).

“It is our understanding that similar allegations against various other noticees in this matter have been dropped on the ground set out above,” said the counsel, also attaching copies of the letters issued by SBI for reference.

The development mirrors past regulatory actions that were later stayed or overturned by courts, such as the Bombay High Court’s rebuke of a similar move by Canara Bank in early 2025 and the ongoing appeal against the market regulator’s 2024 ban on Ambani, according to the RCom counsel.

The RCom legal team has now formally asked the bank to withdraw its June 13, 2025 order, share all supporting documents, and allow a personal hearing in line with principles of natural justice. Until then, the RCom counsel’s letter has called on SBI to refrain from taking any further action, including reporting Ambani’s name to the RBI, and to confirm within five days that it will stay the June 13 order.

A copy of the communication has also been sent to the RBI to apprise the regulator of the alleged procedural lapses by SBI, said the RCom counsel.

The counsel underscored that this communication is issued “without prejudice” to Ambani’s legal rights and remedies.