Punjab National Bank flags over Rs 2,400 crore loan fraud, SREI accused of fraud

Punjab National Bank (PNB), one of the major public sector banks in the country, has once again created a stir in the banking sector. The bank has informed the Reserve Bank of India (RBI) about a loan fraud of ₹2,434 crore. This case is related to two companies of the SREI Group, SREI Equipment Finance and SREI Infrastructure Finance, whose former promoters are said to be involved. Also Read: Will the government check your phone and messages from April 1st? Know what the new rules say

PNB declares Rs 2,434 crore loan fraud

In a filing to the stock exchange, PNB said that the fraud related to SREI Equipment Finance is approximately ₹1,241 crore, while the amount related to SREI Infrastructure Finance is approximately ₹1,193 crore. The good news is that the bank has already made a 100 percent provision for its entire outstanding amount in both these cases, meaning it will not directly impact the bank's accounts.

Resolution through NCLT

The cases of both companies went to the National Company Law Tribunal (NCLT) under the Corporate Insolvency Resolution Process. Their resolution was later approved. After the National Asset Reconstruction Company (NARCL) plan was approved in August 2023, the boards of the companies were reconstituted.

Punjab National Bank

The SREI Group entered the finance sector in 1989 and was considered to have a strong foothold, especially in the financing of construction equipment. However, due to mismanagement and heavy defaults, the company faced insolvency proceedings in October 2021.

How is PNB's financial health?

PNB stated that its provision for the September quarter was ₹643 crore, which is higher than the previous year. The bank's provision coverage ratio has now increased to 96.91%, which is considered a positive sign in terms of the bank's asset quality. Also Read: Received messages from the Income Tax Department? Be careful, or your refund might get stuck

What about the share price?

In the stock market, before this announcement, PNB's share closed with a slight decline of 0.50 percent at Rs 120.35. However, the stock has seen a gain of about 17 percent since the beginning of the year. Over the past 3 years, the stock has given a return of 144 percent. The company's market capitalization was recorded at Rs 1,39,007 crore.