On Saturday, 6th July Punjab National Bank (PNB) reported a fraud of ₹3,800 crore by Bhusan Power and Steel Ltd to Reserve Bank of India (RBI).
The state-owned bank reported the fraud when it is still recovering from a massive fraud of ₹14,356.84 crore by diamond merchant Nirav Modi, who is currently hiding in London and allegedly traveling on a fake passport. Seems like Punjab National Bank is the favorite bank for all fraudsters!
The intimation of fraud was given to Reserve Bank of India on the findings of the forensic audit investigation by the CBI which has filed a first information report (FIR) against the company and its directors for alleging diversion of funds.
The bank said “Bhushan Power & Steel “misappropriated bank funds” and “manipulated books of accounts” to raise funds from a consortium of banks. At present, the case is at the NCLT (National Company Law Tribunal), which is in advance stage and the bank expects a good recovery in the account.
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In a stock exchange filing, PNB said its large corporate branch in Chandigarh had an exposure of close to ₹3,200 crore, an overseas exposure of ₹345 crore through its branch in Dubai and another facility of ₹268 crore was extended at its Hong Kong branch.
Nitin Johari, former Chief Financial Officer and Director of Bhushan Steel’s was arrested by the Serious Fraud Investigation Office (SFIO) on May 2 and now is in judicial custody. He was arrested for alleged fraudulent activities, including filing false documents with various banks.
Currently, Bhushan Power and Steel is insolvent and is being acquired by JSW Steel. The company has offered to pay ₹19,350 crore to financial creditors, which implies a haircut of around 60% for lenders.
On Monday, shares of the bank closed at 11 percent lower at ₹72.80 on BSE.