Punjab & Sind Bank reports Rs 238.3 crore fraud in BPSL case

Government-owned Punjab & Sind Bank (PSB) has reported a Rs 238.3 crore fraud relating to allegations of diversion of funds by the indebted Bhushan Power & Steel Ltd (BPSL).

The development comes less than two weeks after Punjab National Bank (PNB) reported a borrowing fraud of Rs 3,805 crore in BPSL's account.

"Based on forensic audit investigation findings and Central Bureau of Investigation filing FIR on suo moto basis against the company and its directors alleging diversion of funds from the banking system, a fraud of Rs 238.3 crore is being reported by bank to the Reserve Bank of India (RBI)," PSB said in regulatory filings to stock exchanges.

"In the accounts of the company (BPSL), PSB has already made provisions amounting to Rs 189.35 crore as per prescribed prudential norms," it said.

"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 National Company Law Tribunal (NCLT) which is in advance stage and the bank expects a good recovery in the account," PSB said in the statement released late on Wednesday

Bhushan Power and Steel, one of India's most indebted companies, was among the first 12 companies referred by the RBI to a bankruptcy court for a debt resolution process under the new insolvency law.