Punjab National Bank (PNB) on Saturday said that it has detected a fraud of Rs. 3,800 crore in the non-performing asset (NPA) account of Bhushan Power & Steel Limited (BPSL).
In a statement to stock exchanges, PNB said it has reported the fraud to the Reserve Bank of India (RBI).
BPSL is facing insolvency proceedings under the Insolvency and Bankruptcy Code.
Diversion of funds from banking system: PNB
"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. 3,805.15 crore is being reported...to RBI," PNB stated in a regulatory filing.
This includes Rs. 3,191.52cr domestic exposure at Chandigarh branch
PNB's exposure of BPSL's over Rs. 3,800cr fraud includes an Rs. 3,191.52cr domestic exposure at Large Corporate Branch in Chandigarh and overseas exposures of $49.71mn (about Rs. 345.74cr) at Dubai and $38.51mn (around Rs. 267.9cr) at Hong Kong.
"In the accounts of the company (BPSL), the bank has already made provisions amounting to Rs. 1,932.47 crore, as per prescribed prudential norms," the bank said.
BPSL misappropriated bank funds, manipulated books of accounts: PNB
"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," PNB stated.
BPSL is one of the country's most indebted companies
Punjab National Bank reported the BPSL fraud at a time when the state-owned bank is still recovering from an over Rs. 13,000cr fraud by Nirav Modi and his uncle Mehul Choksi.
BPSL is also reportedly one of the "most indebted companies" in India. It was among the first 12 companies referred to a bankruptcy court by the central bank for a debt resolution process.
Sanjay Singal took control of BPSL a few years ago
The Brij Bhushan Singal group split a few years ago due to a conflict between the Singal brothers, Sanjay and Neeraj, following which they took control of Bhushan Power & Steel Limited and Bhushan Steel, respectively.
The Singal brothers, who have failed to repay several bank loans, are already facing multiple investigations.
In 2018, Tata Steel acquired Bhushan Steel through the insolvency resolution route.