The bank said Bhushan Power and Steel misappropriated bank funds and manipulated books of accounts to raise funds from a consortium of banks.

PNB detects Rs 3800 crore fraud by Bhushan Power and Steel
Money Fraud Monday, July 08, 2019 - 07:56

Punjab National Bank, which was only recently rattled by Nirav Modi’s scam has been hit by another major fraud. This time the bank has identified that Bhushan Power & Steel Ltd has drawn Rs 3,805.15 crore from the bank, both in India and overseas and has misused and diverted the funds. The details have been reported to the Reserve Bank of India and the amount stated by the bank in its books is Rs 1,932.47 crore.

The bank has said the Rs 3,800 crore includes Rs 3,191 crore borrowed from Punjab National Bank’s Indian branch while amounts of $49.71 million and $38.51 million have been drawn from the overseas branches of the bank in Dubai and Hong Kong respectively.

The accusation against Bhushan Steel is that the funds were being misappropriated it allegedly used these funds to make false entries in its books to indulge in further borrowings from consortium banks and institutional lenders.

The bank has had the company’s dealings investigated by the Forensic Audit division and based on their findings, the CBI has filed a FIR too, the bank has stated. It is on the strength of these that the NPA provision amounting to Rs 1,932.47 crore has been made.

Bhushan Steel is one of the 12 companies identified by RBI for Insolvency proceedings.

Early 2018, PNB unearthed a Rs 11,300 crore scam in what was then one of the biggest banking scams in the country. Billionaire diamond trader and designer Nirav Modi acquired fraudulent letters of undertaking (LoU) from one of the branches of PNB for receiving overseas credit from other Indian lenders. 

Bhushan Steel’s fraud comes after the Nirav Modi case is still rankling Punjab National Bank and has led to many changes being across the board to the way the bank handles loan and overdraft requests from borrowers.

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