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Allahabad Bank Falls Over 14% On Reporting Exposure To Bhushan Power Fraud

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Shares of Allahabad Bank fell over 14 percent in trade on Monday morning to hit an intraday low of Rs 40.35 apiece on NSE. The decline comes after the state-owned lender reported a fraud of over Rs 1,774 crore by Bhushan Power and Steel to the Reserve Bank of India.

Allahabad Bank Falls Over 14% On Reporting Exposure To Bhushan Power Fraud
 

In a regulatory filing on Saturday, Allahabad Bank said on the basis of the findings of the forensic audit investigation and the CBI's FIR against the company and its directors, alleging diversion of funds from banking system by Bhushan Power and Steel Ltd (BPSL), a fraud of Rs 1,774.82 core has been reported by the bank to the RBI.

In the previous week, Punjab National Bank reported a fraud of Rs 3,805.15 crore by the same entity. Both of the lenders in their filign said that Bhushan Power and Steel misappropriated bank funds, and manipulated books of accounts to raise funds from the consortium of banks.

According to the CBI, Bhushan Power and Steel diverted around Rs 2,348 crore through its directors and staff from the loan accounts of PNB (IFB New Delhi & IFB Chandigarh), Oriental Bank of Commerce (Kolkata), IDBI Bank (Kolkata) and UCO Bank (IFB Kolkata) into the accounts of more than 200 shell companies without any obvious purpose, PTI reported.

Allahabad Bank has made provisions amounting to Rs 900.20 crore against exposure, while PNB has siphoned off around 85 percent of its Rs 4,399 crore exposure to the company.

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