Allahabad Bank down almost 11% on Bhusan Power fraud

Allahabad Bank down almost 11% on Bhusan Power fraud

Not only Allahabad Bank, last week, the PNB also reported a fraud worth  ₹3,805.15 crore by Bhushan Power and Steel. (Photo: Mint)

New Delhi: Shares of Allahabad Bank plunged steeply on Monday after the bank on reported fraud by Bhusan Power and Steel on Saturday.

At 10 am, the Allahabad Bank was trading at 42.70 taking 9.44% on BSE. While on NSE, the national bank slipped 9.23% at 42.80.

Sensex was up 83.91 points, or 0.22%, at 38,820.14.

In a regulatory filing, Allahabad Bank on Saturday 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 1,774.82 core has been reported by the bank to the Reserve Bank of India (RBI).

Not only Allahabad Bank, last week, the Punjab National Bank (PNB) also reported a fraud worth 3,805.15 crore by Bhushan Power and Steel.

“It has been observed that the company misappropriated bank funds, and manipulated books of accounts to raise funds from the consortium of banks,” said Allahabad Bank in a regulatory filing.

The bank has already made provisions amounting to 900.20 crore against exposure of the bank in Bhushan Power and Steel.

It is expected that more banks would report fraud committed by Bhushan Power and Steel as the CBI complaint registered in April named several other lenders.

According to the CBI, Bhushan Power and Steel diverted around2,348 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.

[“source=livemint”]