And now, PNB reports Rs3,800-cr loan fraud by Bhushan Power & Steel
08 July 2019
Punjab National Bank (PNB) on Saturday reported a borrowing fraud of Rs3,805 crore ($556 million) in Bhushan Power & Steel Ltd's account. The fraud, being reported to the RBI on the basis of the findings of the forensic audit, follows a Rs11,400 crore scam that came to light last year.
The Central Bureau of Investigation (CBI) is expected to file a first information report on the diversion of funds from the banking system, the PNB said in a statement to stock exchanges.
PNB said Bhushan Power & Steel misappropriated bank funds and manipulated its books of accounts to raise funds from consortium lender banks.
"On the basis of forensic audit investigation findings and CBI filing FIR, on suo moto basis, against the company and its directors, alleging diversion of funds from banking system, a fraud of Rs3,805.15 crore is being reported by bank to RBI," Punjab National Bank (PNB) said in a regulatory filing.
The lender added that it has already made provisions amounting to Rs1,932.47 crore, as per prescribed prudential norms, for the BPSL account.
“It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks. At present, the case is at NCLT which is in advance stage and the Bank expects good recovery in the account," PNB added.
PNB said its domestic exposure to Bhushan Power & Steel Ltd (BPSL) stood at Rs3,191.51 crore and overseas exposure at $49.71 million (around Rs345.74 crore) at Dubai branch and $38.51 million (around Rs267.90 crore) at Hong Kong branch.
"It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks," PNB said, adding that it had already made provisions of 19.32 billion rupees in Bhushan's account.
Bhushan Power and Steel, one of India's most indebted companies, was among the first 12 companies referred by the RBI India to a bankruptcy court for a debt resolution process under the new Indian Bankruptcy Code.