Another Scam Hits PNB As Bank Reports Borrowing Fraud Of Over Rs 2000 Crore: What We Know

Punjab National Bank (PNB) has reported a fraud of Rs 2,000 crore in the NPA account of IL&FS Tamil Nadu Power Co. Ltd. According to a report by Mint, the bank has reported the fraud to RBI. The exact value of the fraud is Rs 2060.14 crore.

The incident has happened at the Extra Large Corporate Branch in Delhi zonal office, the bank said.

Ą°A fraud of Rs 2,060.14 crore is being reported by the bank to the RBI in the accounts of the company," PNB said in a filing.

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This comes as the bank already fights the infamous case of the Nirav Modi scam. It added that the bank has already made provisions amounting to Rs 824.06 crore.

Ą°The bank has already made provisions amounting to Rs 824.06 crore, as per prescribed prudential norms," PNB said in the disclosure.

Earlier, the Punjab & Sind Bank (PSB) had said on February 15 that it had declared IL&FS Tamil Nadu Power as bad asset with dues of over Rs 148 crore, and reported it to the Reserve Bank of India.

As per the bankĄ¯s policy on determination and disclosures on material events, PSB said it has declared this non-performing account (NPA) as a fraud account.

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Ą°It is informed that an NPA account, viz IL&FS Tamil Nadu Power Company Ltd with outstanding dues of Rs 148.86 crore has been declared as fraud and reported to RBI today as per regulatory requirement," the lender had said in a regulatory filing.

IL&FS Tamil Nadu Power Co. was set up as a special purpose vehicle (SPV) by the debt-laden Infrastructure Leasing & Financial Services Ltd (IL&FS) under its energy platform IEDCL for implementation of thermal power projects at Cuddalore in Tamil Nadu.

According to the RBI norms, lenders must recognise incipient stress in loan accounts, immediately on default, by classifying such assets as special mention accounts (SMA).

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SMA-0 - Categories will be treated as default case fit for insolvency resolution if they fail to pay the principal or interest due on them within 0-30 days.

SMA-1 - Defaulters will be taken for Insolvency and Bankruptcy Code (IBC) if they don't pay between 31-60 days.

SMA-3 - Firms will be treated for National Company Law Tribunal (NCLT) in case of no payment of dues within 61-90 days.

The resolution plan involving restructuring or change in ownership of accounts where the aggregate exposure of lenders is ?100 crore and above, will require independent credit evaluation (ICE) of the residual debt by credit rating agencies (CRAs) specifically authorised by the Reserve Bank for this purpose.

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