New Delhi | Public sector lender Punjab National Bank (PNB) has declared the ₹201.51 crore loan account of Reliance Group company Reliance Telecom Limited (RTL) as “fraud.” The action follows an extensive forensic audit and investigation conducted by the bank’s Fraud Examination Committee, which reportedly found indications of fund diversion, round-tripping and misuse of bank loans. The development has triggered fresh concerns across the banking and corporate sectors.
In a regulatory filing submitted to stock exchanges, Reliance Communications Limited (RCOM) stated that it received an official communication from PNB on May 9, 2026. According to the bank, the explanations and documents provided by the company during the investigation were found unsatisfactory, leading to the classification of the loan account as “fraud.”
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The bank’s action has also brought several former directors and associated officials under scrutiny. The names mentioned in the order include Grace Thomas, Sateesh Seth, Satyendra Mohanlal Sarupriya and Dagdulal Kasturchand Jain. PNB has alleged that their roles surfaced during the examination of suspicious financial transactions and decisions linked to the company’s corporate structure.
The forensic audit reportedly highlighted multiple financial irregularities. According to the findings, circular transactions were allegedly carried out among related entities with the objective of inflating business turnover and revenue figures. Investigators also found that nearly ₹221.93 crore was transferred from RTL to RCOM. A portion of the amount was allegedly routed into mutual fund investments and other non-business activities.
The report further stated that a substantial portion of loans and advances obtained from consortium banks was allegedly used to make payments to connected parties rather than being deployed for legitimate business purposes. Investigators also flagged ₹1,347.70 crore worth of liabilities and receivables reflected in the books of Reliance Infratel Limited (RITL) as suspicious. The audit reportedly indicated that several of these entries did not correspond with genuine commercial activity.
The development comes at a time when both RCOM and RTL are already undergoing the Corporate Insolvency Resolution Process (CIRP). In its statement, the company maintained that the transactions and accounts under scrutiny relate to the period before the initiation of insolvency proceedings. It added that legal options are currently being explored while taking into account the ongoing resolution process and existing management framework.
The company has also indicated that it may seek protection under Section 32A of the Insolvency and Bankruptcy Code (IBC). Under this provision, once a resolution plan is approved by the National Company Law Tribunal (NCLT), a corporate debtor may receive immunity from certain past liabilities following acquisition or restructuring. However, such protection does not automatically extend to former directors or individuals associated with the alleged irregularities.
Sources indicated that PNB is expected to report the matter to the Reserve Bank of India (RBI), after which banking regulators and investigative agencies may examine the case further. Financial sector experts believe that monitoring of large corporate loan accounts and related-party transactions has become significantly stricter in recent years amid rising concerns over fund diversion and financial misconduct.
Market analysts say the implications of such cases extend beyond the companies directly involved, affecting investor confidence, corporate governance standards and the banking sector’s overall risk management framework. Legal and regulatory developments in the matter are expected to intensify in the coming weeks.
