Punjab National Bank(PNB) said it had detected a fraud of Rs.3,805 crore by Bhushan Power & Steel Ltd and has reported it to the Reserve Bank of India(RBI). Exposure of Rs.3,800 crore includes domestic exposure of Rs.3,191 crore, overseas exposure of $49.71 million at the bank's Dubai branch and $38.51 million at its Hong Kong branch.
PNB said the company misappropriated bank funds and manipulated books to raise funds from consortium lenders. On the basis of Forensic Audit Investigation findings and the CBI filing an FIR on a suo moto basis, against the company and its directors, alleging diversion of funds from the banking system, a fraud of Rs.3,805.15 core is being reported by the bank to the RBI, the bank said.
The state-owned bank also said that it has made provision of Rs.1,932.47 crore against this account. BPSL is one of the 12 accounts identified by the RBI for insolvency proceedings. JSW Steel has offered to pay Rs.19,350 crore to financial creditors, which implies a haircut of around 60% for lenders.
The state-owned bank reported the fraud at a time when it is already recovering from the Nirav Modi scam, where it was defrauded of Rs.11,400 crore.
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