Punjab National Bank fraud: Once again the echo of a big corporate fraud is being heard in the banking sector of the country. Leading public sector bank Punjab National Bank (PNB) has taken strict action against Shrey Group entities by freezing their loan accounts as ‘fraudulent’. Has been declared. The bank has taken this step after a thorough forensic audit.
Mathematics of fraud and strictness of PNB Punjab National Bank has informed the market through an exchange filing that a total fraud of Rs 2,434 crore has been found in entities linked to the former promoters of Srei Equipment Finance and Srei Infrastructure Finance. According to the bank, a major part of this amount, i.e. Rs 1,240.94 crore, is related to credit equipment finance, while the remaining Rs 1,193.06 crore is related to accounts of credit infrastructure finance. The bank has made 100 percent provision for these accounts for security reasons, so that it does not affect the financial stability in future.
Forensic audit exposed, now court challenge
This action of PNB is based on a ‘Fraud Forensic Audit Report’ Based on the findings of. The report points out shocking irregularities, particularly in the conduct of ‘related parties’ (Related Parties) and attempts to artificially revive distressed loan accounts. However, Shrey Group has vehemently rejected these allegations and challenged the audit report. They argue that since the matter is still sub judice, it is unfair to classify it as a fraud.
bankruptcy process
Shrey Group’s financial condition has been deteriorating since October 2021, when the Reserve Bank of India (RBI) dissolved its board due to governance problems and payment defaults. At that time the total outstanding to the lenders had reached approximately Rs 32,750 crore. Subsequently, RBI had referred these companies to the National Company Law Tribunal (NCLT) for the bankruptcy resolution process. Before PNB, other big banks like Bank of Baroda, Union Bank and Punjab and Sindh Bank have also declared these accounts as fraud.
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NRCL acquisition
In February 2023, National Asset Reconstruction Company (NRCL) emerged as the successful bidder for these companies. NRCL’s resolution plan received approval from NCLT in August 2023 and the takeover process was finalized by January 2024. Meanwhile, PNB now declaring it a fraud shows that despite the resolution process, the bank is in no mood to spare those responsible for the fraud.
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