Public sector bank and lender, Punjab National Bank said on July 6th it has identified a fraud of more than Rs 3,800 crore by Bhushan Power and Steel Ltd (BPSL) and has announced it to the Reserve Bank of India (RBI). PNB said Bhushan Power and Steel Ltd misused bank reserves and controlled its books of records to raise assets from consortium moneylender banks.
Punjab National Bank (PNB) said in a regulatory filing, “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 Rs 3,805.15 crore is being reported by bank to RBI.”
PNB also added, “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 said the bank has effectively made arrangements adding up to Rs 1,932.47 crore, according to prudential norms, for the BPSL account against the PNB Fraud.
PNB said its local exposure to Bhushan Power and Steel Ltd (BPSL) remained at Rs 3,191.51 crore and abroad presentation of USD 49.71 million (approx Rs 345.74 crore) at Dubai branch and USD 38.51 million (approx. Rs.267.90 crore) at Hong Kong branch.
The state-run bank has detailed a new fraud when it is recouping from a noteworthy budgetary theft of around USD 2 billion (around Rs 13,000 crore) by diamond merchant Nirav Modi that was accounted for in February 2018.
Modi supposedly acquired fake letters of undertaking (LoUs) from one PNB’s branches for overseas credit from other Indian lenders, and is being tested by CBI and Enforcement Directorate among different organizations.
PNB said the organization misused bank assets and controlled books to raise assets from consortium moneylenders.
BPSL is one of the 12 records distinguished by the RBI for indebtedness procedures. JSW Steel has offered to pay ₹19,350 crore to financial creditors, which infers a haircut of around 60% for banks.
The state-claimed bank announced the fraud when it is already recovering from the Nirav Modi scam, where it was swindled of ₹11,400 crore.