2,434 crore fraud: The state-owned Punjab National Bank (PNB) has reported to the Reserve Bank of India (RBI) about an alleged loan fraud against the former promoters of Srei Equipment Finance and Srei Infrastructure Finance. The alleged loan fraud reported by the bank PSU amounts to 2,434 crore.
Out of 2,434 crore alleged loan fraud flagged, 1,240.94 crore pertains to Srei Equipment Finance, while Rs 1,193.06 crore relates to Srei Infrastructure Finance, PNB said.
In an exchange filing on Friday evening, PNB informed about the report to RBI, saying, “Pursuant to the applicable provisions of SEBI (LODFR) Regulations, 2015 and the Bank’s Policy for determining materiality of events/information required to be reported to the Stock Exchanges, it is hereby informed that the bank has reported borrowing fraud to RBI against the erstwhile promoters of the below mentioned entities: SREI Equipment Finance ( 1240.94) and SREI Infrastructure Finance ( 11 93.06 crore).”
forensic audit findings
The PSU bank, as reported by Zee Business, said that loan fraud by former promoters of the said companies are based on the findings of a forensic report in this regard. PNB said the matter was reported to RBI after the findings of serious irregularities in the report. The irregularities, as said by the PNB in Zee Business report, included loans being extended to connected parties and possible evergreening of borrowings. Evergreening refers to the practice of taking out new loans to repay existing ones, thereby concealing financial stress in accounts.
The PSU bank further clarified that it has already made 100% provisioning for these loans, meaning the financial impact of the fraud classification has been fully accounted for in its books.
However, Srei group founder and former promoter Hemant Kanoria has challenged the PNB’s forensic audit report, arguing that such findings of the report cannot be used as the basis for declaring the accounts as fraudulent. He has maintained that the matter is currently sub judice.
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