In a significant development, Canara Bank on Thursday informed the Bombay High Court that it has withdrawn its order classifying the loan account of Reliance Communications — a firm linked to industrialist Anil Ambani — as “fraudulent”.
Following the bank’s submission, a division bench of Justices Revati Mohite Dere and Neela Gokhale disposed of Ambani’s petition challenging the fraud classification, observing that nothing further survived in the matter. The court also directed that the withdrawal order be reported to the Reserve Bank of India (RBI).
The disputed loan, amounting to ₹1,050 crore, was extended by the bank in 2017. In an order dated November 8, 2024, Canara Bank had classified the account as fraudulent, alleging that the funds were routed to a group company for settling liabilities with related parties. The classification was based on RBI’s Master Circular on fraud detection and reporting.
However, the High Court had stayed the bank’s order in February 2025, noting concerns over procedural lapses. The bench had questioned whether banks were violating both the RBI’s circulars and the Supreme Court’s directions, which require that borrowers be granted a fair hearing before such adverse classifications are made.
Ambani had argued that he was not afforded an opportunity to be heard before the fraud tag was applied. He further contended that although the order was dated November 8, 2024, it was communicated to him only on December 25 — after a similar classification had already been stayed by the court in a connected matter.
He also alleged that Canara Bank had informed the RBI of the classification as early as September 6, 2024 — two months before the official order was issued.
The loan account in question pertains to Reliance Communications, which is currently undergoing insolvency proceedings. With the withdrawal of the fraud tag, the matter before the court now stands closed.
