BSNL is struggling with what may be a network of fraudsters profiting from the sale of illegally procured SIM cards.
While India requires all purchasers of a SIM card to register their identity, a man was recently arrested for procuring at least six SIM cards under false identities, the Hindustan Timessaid.
The cards were then sold to people in Kanpur, who used the SIM to make IDD calls until discarding them.
BSNL confirmed the arrest, although it said it was only aware of the one case so far. But the Hazratganj police said it was investigating a network of criminals involved in the scam.
The fraud was discovered when BSNL discovered a SIM with 85,000 rupees ($1,800) worth of unpaid fees, which had been registered to one person but which used another's photo.
The majority of calls using the offending SIM were made to Gulf countries.
BSNL has requested details from the franchise company involved in verifying the identities of SIM purchasers, but discovered that the SIM card was issued before the agency was given the verification contract.