The Bank of Maharashtra has classified its ₹488 crore exposure to Reliance Communications (RCOM) as fraudulent, becoming the fourth public sector lender—after SBI, Bank of Baroda, and Bank of India—to do so. The decision adds to the growing scrutiny of RCOM’s financial conduct amid its ongoing insolvency proceedings.
Irregularities and Round-Tripping Allegations
The bank cited serious irregularities involving Reliance Infratel Ltd., an RCOM subsidiary, where Letters of Credit worth ₹2,779.38 crore were allegedly misused. According to reports, these discounted LCs were round-tripped—with funds rotated across accounts to falsely indicate repayments, a practice known as evergreening that conceals bad loans.
Legal Context Under Insolvency Proceedings
RCOM remains under the Corporate Insolvency Resolution Process (CIRP) governed by the Insolvency and Bankruptcy Code (IBC), 2016. Under IBC provisions, new or pending legal actions against the company are restricted, and liabilities for offences committed before the CIRP may be shielded until the National Company Law Tribunal (NCLT) approves the resolution plan.
This latest development highlights ongoing concerns around governance lapses and fraudulent financial practices in India’s telecom insolvency cases.
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