PNB just flagged a ₹2,434cr loan fraud to the RBI
What's the story
Punjab National Bank (PNB) has flagged a loan fraud of ₹2,434 crore to the Reserve Bank of India (RBI). The fraud involves the ex-promoters of SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL). PNB said in its regulatory filing that it has reported a borrowing fraud case against these firms. The amount involved is ₹1,240.94 crore for SEFL and ₹1,193.06 crore for SIFL.
Financial measures
PNB makes full provisions for outstanding amounts
In its filing, PNB also said that it has made 100% provisions against the entire outstanding amount. This comes after both SEFL and SIFL were successfully resolved under the Corporate Insolvency Resolution Process (CIRP). The cases were referred for insolvency in October 2021 after RBI intervened and superseded their boards over governance concerns and repayment failures.
Corporate history
SEFL and SIFL's financial journey
SEFL and SIFL are two companies with a combined debt of ₹32,700 crore. They were acquired by the National Asset Reconstruction Company Ltd (NARCL) in December 2023. The Kanoria family, which controlled both companies, faced RBI action over alleged mismanagement leading to IBC proceedings. SREI started its journey as an asset financing NBFC in 1989 under Hemant Kanoria's leadership at SIFL.
Profit report
PNB's financial performance amid loan fraud case
Despite the loan fraud case, PNB has reported a 14% rise in its standalone net profit for the September quarter of FY26. The bank's profit stood at ₹4,904 crore as compared to ₹4,303 crore in the same period last year. Its operating profit for July-September was at ₹7,227 crore and ₹14,308 crore in H1 FY26, marking a YoY growth of 5.46% and 6.51%, respectively.