Canara Bank has officially classified Reliance Telecom Limited (RTL), a subsidiary of Reliance Communications (RCom), as a 'wilful defaulter'. The bank also extended this classification to the erstwhile chairman and director of RCom, citing their role as promoter of the holding company.
Despite this significant development, shares of Reliance Communications Ltd. experienced a notable surge, locking at its 5 per cent circuit limit at Re 0.89 apiece in Tuesday's trading.
Details of the Wilful Defaulter Classification
According to a letter received by Reliance Telecom from Canara Bank, the bank's Review Committee for Wilful Defaulters made its decision on August 31, 2026. The committee concluded that there were sufficient grounds to classify RTL as a wilful defaulter, aligning with guidelines issued by the Reserve Bank of India (RBI).
The classification of RCom's former chairman as a 'wilful defaulter' was also based on applicable RBI guidelines, acknowledging their past capacity as chairman and director of RCom.
Insolvency Proceedings and Future Steps
Both Reliance Communications and Reliance Telecom are currently undergoing a corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016. The respective committees of creditors for RCom and RTL have already approved resolution plans, which are now awaiting the final approval of the National Company Law Tribunal (NCLT) in Mumbai.
RCom has stated that the loan account referenced in Canara Bank's letter pertains to a period prior to RTL's CIRP. Such accounts are required, under the Code, to be resolved as part of a broader resolution plan or during liquidation.
In response to the bank's classification, RCom confirmed it is seeking legal advice to determine the appropriate course of action moving forward.