Allahabad Bank Drops On Detecting Fraud Of Rs 1,775 Crore In Bhushan Power Loan Account
Allahabad Bank share price fell as much as 14.53 per cent on the BSE to Rs 40.30 after it informed exchanges on Saturday that it had detected a fraud of Rs 1,774.82 crore in loan account of its borrower Bhushan Power and Steel. On the National Stock Exchange, Allahabad Bank share price dropped as much as 14.42 per cent to Rs 40.35. (Also Read: Allahabad Bank Reports Rs. 1,775 Crore Alleged Fraud By Bhushan Power & Steel)
This is the second detection of fraud by Bhushan Power and Steel after Punjab National Bank earlier this month reported a borrowing fraud of Rs 3,805 crore in Bhushan Power & Steel Ltd's account to the Reserve Bank of India (RBI). The fraud, "alleging diversion of funds from the banking system" was being reported to the RBI on the basis of the findings of forensic audit and the police filing a first information report, the PNB said in a statement to stock exchanges.
"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 made provisions of Rs 1,932 crore in Bhushan's account.
Allahabad Bank in an exchange filing said, "On the basis of Forensic Audit Investigation findings and CBI filing FIR, on suo moto basis, against the Company and its Directors, alleging diversion of funds from banking system by the Bank's borrower namely Bhushan Power and Steel Ltd. (BPSL), a fraud of Rs 1,774.82 core has been reported by the Bank to the Reserve Bank of India."
Allahabad Bank has made provisioning of Rs 900.20 crore against the exposure of the bank in Bhushan Power and Steel, the bank's exchange filing added.
"It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks. At present, the case is at NCLT which is in advance stage and the Bank expects good recovery in the account," Allahabad Bank said.
As of 11:24 am, Allahabad Bank shares traded 10.60 per cent lower at Rs 42.15, underperforming the Sensex which was up 0.14 per cent. Trading volume in Allahabad Bank shares spiked as 8.48 lakh shares changed hands on the BSE compared with an average of 3.08 lakh shares traded daily in the past two weeks.
(With agency inputs)