Chennai: Punjab National Bank has reported to the RBI that Bhushan Power & Steel Ltd (BPSL) has fraudulently manipulated its books to raise funds from consortium lender banks.
The public sector lender said it detected a fraud of more than Rs 3,800 crore by BPSL and added that the firm in question misappropriated bank funds.
“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,” Punjab National Bank (PNB) said in a regulatory filing.
“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 has said it already made provisions amounting to Rs 1,932.47 crore, as per prescribed prudential norms, for the BPSL account. It added that its domestic exposure to Bhushan Power & Steel Ltd (BPSL) stood at Rs 3,191.51 crore and overseas exposure of $49.71 million (approx Rs 345.74 crore) at Dubai branch and $38.51 million (approx. Rs 267.90 crore) at Hong Kong branch.
It must be noted that the bank is currently recovering from a major financial embezzlement of around $2 billion by diamond merchant Nirav Modi.