India’s fourth largest bank has reported another big-ticket scam. On July 6, Punjab National Bank (PNB) said in a stock exchange filing that one of its debtors, Bhushan Power & Steel, has defrauded the bank of Rs. 3805.15 crore ($555 million).
“It has been observed that the company has misappropriated bank funds, and manipulated books of accounts to raise funds from consortium lender banks,” PNB said.
The scam came to light during a forensic audit, after which India’s central bureau of investigation (CBI) filed a suo motu complaint against the company, the bank added. The audit was also conducted by the CBI, the Times of India newspaper reported.
Bhushan Power & Steel has been a defaulter for long. In June 2017, it was one of the first high-profile companies that India’s central bank referred to the bankruptcy court after its loans turned into non-performing assets.
This is the second scam of great magnitude that PNB has reported in recent times. In January 2018, the bank informed the CBI that diamond merchants Nirav Modi and Mehul Choksi had defrauded it of, what was later ascertained as, Rs14,357 crore. That the fraud had ballooned to such an amount before the bank took notice had led to public outrage and allegations of high-level corruption.