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

After Punjab National Bank (PNB), Allahabad Bank, Punjab & Sind Bank on Wednesday reported Rs 238 crore fraud by Bhushan Power & Steel to the Reserve Bank of India (RBI). The bank said that it has made provision amounting Rs 189 crore.

“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.238.30 crore is being reported by Bank to RBI. In the accounts of the company (BPSL), Bank has already made provisions amounting to Rs.189.35 crore, as per prescribed prudential norms,” Punjab & Sind Bank said in a regulatory filing.

As many as 33 lenders have exposure to this beleaguered company that is undergoing the insolvency resolution process. Bhushan Power and Steel, one of India’s most indebted companies, was among the first 12 companies referred by the RBI India to a bankruptcy court for a debt resolution process under India’s new insolvency law.

Punjab National Bank had detected a fraud of Rs 3,805.15 crore by Bhushan Power & Steel. Similarly, Allahabad Bank had reported misappropriation of funds by the private firm to the tune of Rs 1774.82 crore to the central bank.

“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.

Meanwhile, Bhushan Steel’s former chief financial officer and director Nittin Johari was arrested by the Serious Fraud Investigation Office (SFIO) on May 2. He was arrested for alleged fraudulent activities.

Shares of Punjab & Sind Bank closed the day at Rs 25.70, down 0.100 points, or 0.39% on BSE.

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