SBI vs Anil Ambani – Why India's Largest Lender Titled the Business Tycoon 'Fraud'
In Detail: India’s largest public sector lender, State Bank of India (SBI), labelled industrialist Anil Ambani a "fraudulent borrower" in connection with loans extended to his company, Reliance Communications.
In a startling escalation of a long-standing corporate and legal dispute, India’s largest public sector lender, State Bank of India (SBI), has officially labelled industrialist Anil Ambani a "fraudulent borrower" in connection with loans extended to his company, Reliance Communications. The move comes after years of litigation, recovery attempts, and dramatic turns in the financial fortunes of the younger Ambani scion, once among the richest Indians.
The Background: From Billionaire to Bankruptcy
Anil Ambani, once chairman of the Reliance Group that included telecom, infrastructure, power, and financial arms, witnessed a swift downfall over the past decade. His conglomerate, especially Reliance Communications (RCom), spiraled into debt and litigation, with multiple group entities defaulting on massive loan obligations.
In 2020, Anil Ambani claimed before a UK court that he was "bankrupt" and had zero net worth, during a case involving Chinese banks. That declaration, however, did little to stop Indian lenders from pursuing recoveries.
Two of his key group firms — Reliance Communications Ltd and Reliance Infratel Ltd — were declared insolvent under India’s Insolvency and Bankruptcy Code (IBC), with proceedings dragging for years as potential resolution applicants came and went.
SBI’s Move: Declaring a "Fraudulent" Borrower
This week, the dispute intensified when SBI moved to designate Anil Ambani himself as a “fraudulent borrower”, under the provisions of the Reserve Bank of India’s Master Directions on Frauds.
The case primarily pertains to loans worth over ?1,200 crore extended by a consortium of banks led by SBI to Reliance Communications and Reliance Infratel, which have since turned into non-performing assets (NPAs). SBI's forensic audit found alleged diversion of funds, misrepresentation of financials, and willful default in repaying loans.
The "fraud" tag means Ambani and his entities may face further restrictions, including:
Being debarred from raising funds from Indian banks and financial institutions.
Legal prosecution for criminal misconduct.
Closer scrutiny by enforcement agencies including the CBI, ED, and SFIO.
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Reliance Communications Response to SBI's fraud move
Two day ago on July 3, 2025 Reliance Infrastructure Limited and Reliance Power Limited clarifies the recent action by State Bank of India to classify the loan account of Reliance Communications Limited as fraud has absolutely no impact on the business. Further, Mr. Anil D. Ambani is not on the Board of Reliance Infrastructure Limited. Accordingly, any action taken in relation to Reliance Communications has no bearing or impact on the governance, management, or operations of Reliance Infrastructure. Reliance Infrastructure continue to focus on its business plans and remain committed to creating value for all stakeholders.
Past Legal Tussles
This is not the first flashpoint in SBI’s battle with Ambani. In 2020, SBI had sought personal guarantees worth ?1,200 crore from Anil Ambani against corporate loans. Ambani contested the claim, asserting that he had never signed personal guarantees. However, a UK court ordered him to set aside $100 million in that case, casting doubts over his "zero net worth" claim.
SBI also filed an application under the Insolvency and Bankruptcy Code (IBC) against Anil Ambani as a guarantor for the defaulted loans. However, the National Company Law Tribunal (NCLT) had paused personal insolvency proceedings pending clarity on the extent of his liability.
Fraud Classification: Legal Implications
Under RBI rules, fraud classification can only follow an independent forensic audit and decisions by a bank’s Fraud Identification Committee (FIC). SBI reportedly acted on the findings of such a report that flagged severe lapses and misuse of funds by the borrowing companies.
The move to classify Ambani as a fraudulent borrower may allow the CBI and ED to pursue more aggressive criminal investigations, potentially invoking provisions of the Prevention of Corruption Act and Money Laundering Act.
Legal experts say this step is “unusual but not unprecedented.” It is rare for banks to tag high-profile industrialists as fraudsters, unless there's evidence of systemic financial wrongdoing.
The Ambani Response
While Anil Ambani has not yet made a public statement on the new fraud allegations, his legal team is expected to contest the classification. In past cases, Ambani has claimed victimhood of systemic industry failures, regulatory overreach, and market dynamics beyond his control.
A source close to the Reliance Group, speaking on condition of anonymity, said, “The attempt to malign Mr. Ambani is motivated and based on a faulty understanding of business risk and legal guarantees.”
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SBI's action could set a new precedent in India’s banking landscape — signalling that even politically-connected or once-prominent borrowers are not immune from stringent accountability.
With regulators cracking down and public anger rising over bad loans and willful defaults, the move also serves as a message to India Inc: personal credibility may no longer shield corporate wrongdoings.
As of now, the matter remains sub judice with appeals and counter-cases likely to extend the legal battle for years. But for Anil Ambani and firm Reliance Communications the “fraud” tag marks another major blow — reputational, legal, and financial — in a spectacular fall from corporate grace.
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