Canara Bank Withdraws ‘Fraud’ Tag from Anil Ambani’s Loan Account, Informs Bombay High Court

Canara Bank has informed the Bombay High Court that it has officially withdrawn its earlier decision of classifying industrialist Anil Ambani’s loan account as fraudulent. This is a major development in a case that began in November 2024, when Canara Bank had labeled a loan given to Reliance Communications – a company promoted by Anil Ambani – as a fraudulent account. Recently, State Bank of India has also marked Reliance Communications loan as ‘FRAUD’.

Background of the Case

The dispute is related to a loan of ₹1,050 crore that Canara Bank had given in 2017 to Reliance Communications and one of its subsidiaries. The loan was meant to be used for Capital expenditure (buying or upgrading fixed assets), and Repayment of existing debts.

However, in November 2024, Canara Bank declared the account as fraudulent, saying that the company misused the funds and diverted them elsewhere.

Anil Ambani Challenges the Bank in Court

After the loan account was declared fraudulent, Anil Ambani challenged the decision in the Bombay High Court. He argued that Canara Bank did not follow proper procedures before making such a serious accusation. As per legal and regulatory guidelines, a proper investigation and show-cause notice should be issued before declaring an account as fraudulent.

What Did the Bank Allegedly Find?

Canara Bank claimed that the loan funds were not used for the purposes they were approved for. Some of the money was allegedly routed through group companies. Funds were also said to be invested in mutual funds and used to purchase fixed assets, which was not part of the agreed loan usage. These findings led the bank to suspect fund diversion and financial irregularities.

Canara Bank Withdraws the Fraud Declaration

Now, on July 10, Canara Bank told the court that it has taken back its decision to label the loan account as fraudulent. This could mean the bank is reconsidering the case, possibly due to legal challenges or gaps in procedure.

With Canara Bank withdrawing its fraud tag, the legal battle may take a different course. It could also impact how other banks treat Reliance Communications’ loan accounts. If due process was not followed, other banks may also be forced to review or reverse their decisions.