Bhushan Power & Steel fraud: After PNB, Allahabad Bank reports misappropriation of funds

NEW DELHI: Days after Punjab National Bank (PNB) announced the detection of the Rs 3,805 crore fraud by Bhushan Power & Steel Ltd (BPSL), another public sector lender Allahabad Bank has reported misappropriation of funds by the private firm. The bank has reported a fraud to the tune of Rs 1774.82 crore to the Reserve Bank of India (RBI). “In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we have to inform you that 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 the banking system by the Bank’s borrower namely Bhushan Power and Steel Ltd. (BPSL), a fraud of Rs 1774.82 crore has been reported by the Bank to the Reserve Bank of India. The Bank has already made provisions amounting to Rs 900.20 crore against the exposure of the Bank in BPSL,” Allahabad Bank said in a regulatory filing on Saturday.
As many as 33 lenders have exposure to this beleaguered company that is undergoing the insolvency resolution process. “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,” it added.
Earlier, PNB had alleged that BPSL misappropriated bank funds and manipulated its books of accounts to raise funds from its consortium of lenders. Around 85 per cent of PNB’s Rs 4,399 crore exposure to the company had been siphoned off. “On the basis of forensic audit investigation findings [initiated by SBI] and CBI filing FIR, on suo moto basis, against the company and its directors, alleging diversion of funds from [the] banking system, a fraud of Rs 3,805.15 crore is being reported by the bank to RBI,” PNB had said in a regulatory filing.