The Punjab National Bank (PNB) on July 5, Saturday, reported a borrowing fraud of Rs 3805 crore in Bhushan Power & Steel’s account to the Reserve Bank Of India.

PNB Detects Fraud

The fraud of Rs 3805 crore included a domestic exposure of Rs 3191.51 crore at the PNB’s Chandigarh branch, and overseas exposure at Dubai branch of Rs 345.74 crore and Rs 267.9 crore exposure at the Hong Kong Branch.

The fraud, “alleging diversion of funds from the banking system”, was reported to the RBI based on the findings of the forensic audit and the federal police filing a first information report, the PNB said in a statement to stock exchanges against the company and its directors. 

“It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks,” PNB said, adding that it had already added 19.32 billion rupees in Bhushan’s account.

The Serious Fraud Investigation Office (SFIO) filed 70,000 page chargesheet in court listing multiple frauds against Bhushan Steel promoters, auditors and directors. 

Bhushan Steel’s former Chief Financial Officer and Director, Nitin Johari was taken into custody by the Serious Fraud Investigation Office (SFIO) on May 2 and is still in judicial custody. 

Frauds In Past

In April, the CBI had carried out searches at 18 locations connected to Bhushan Power and Steel Limited after registering a case of cheating of Rs 2348 crore.

CBI then registered a case against its directors, Sanjay Singhal, vice-chairman Aarti Singhal in the fraud case.

It was alleged that the company through its directors and staff, diverted the loan amounts from Punjab National Bank, Oriental Bank of Commerce, IDBI Bank, and UCO Bank into the accounts of various companies without any purpose and misused the funds.

The fraud cases against Bhushan power and steel comes a year after India’s fourth-largest bank reported a massive financial misappropriation of around Rs 13,700 crore by Nirav Modi and Mehul Choksi. 

At present, Bhushan Power and Steel is one of the most indebted companies in the country. It comes in the list of top 12 companies referred by the RBI to a bankruptcy court for debt resolution under the present insolvency law. 

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