Shares of state-owned Allahabad Bank went down 15 percent on the early morning of July 15 after the share market opened. This came after the state-owned bank reported a fraud of Rs 1774 crore by Bhushan Power and Steel to the Reserve Bank of India on July 13. 

Earlier Punjab National Bank (PNB) reported alleged fraud by Bhushan Power and Steel on July 5. Later, a report was filed with Reserve Bank of India (RBI) on the basis of the evidence from forensic audit investigation and the Central Bureau of Investigation’s FIR against the company and its directors. The report alleged that there was a diversion of funds by the Bhushan Power and Steel Ltd and a fraud of Rs 3805 crore was reported by the bank.

“It has been observed that the company misappropriated bank funds, and manipulated books of accounts to raise funds from the consortium of banks,” Allahabad Bank said in a statement issued. Just like in the case of a fraudulent made to PNB, the Allahabad Bank has already made provisions worth Rs 900 crores against exposure of the bank in Bhushan Power and Steel Ltd.

The case is in the National Company Law Tribunal at present, which is an advanced stage and the bank has hopes of a quick and suitable recovery in the account. It is anticipated that there are other banks as well that will report fraud committed by Bhushan Power as the CBI FIR registered in April identified many lenders.

As per CBI, Bhushan Power and Steel has diverted money amounting to Rs 2348 crore with the help of its directors and staff using the loan accounts of PNB, Oriental Bank of Commerce, IDBI Bank and UCO Bank into the accounts of about 200 shell companies without any specified purpose. 

“It was further alleged that the said Company availed various Loan facilities from 33 banks/financial institutions during the year 2007 to 2014 to the tune of ₹47,204 crore (approx) and defaulted on repayments. Subsequently, lead bank PNB declared the account as NPA followed by other banks and financial institutions,” the CBI had stated in a statement. 

Bhushan Power & Steel defaulted on Rs 47,700 crore in 2017 and was one of the 12 companies referred for resolution under the Insolvency and Bankruptcy Code.

Also Read: After Nirav Modi Scam, Punjab National Bank Reports Another Fraud Of Rs 3805 Crore