PNB reports borrowing fraud of ₹1,200 crore involving private firm

The Punjab National Bank (PNB) on Wednesday (September 30) reported a borrowing fraud worth ₹1,203.26 crore by Ahmedabad-based Sintex Industries Ltd.

Pursuant to the applicable provisions of SEBI’s Listing Obligations and Disclosure Requirements (LODR) and the bank’s policy, “we inform reporting of borrowal fraud of ₹1,203.26 crore in NPA account of Sintex Industries Ltd (SIL),” PNB said in a regulatory filing.

The fraud reporting pertains to the large corporate branch at Ahmedabad zonal office, it added.

The PNB said in the regulatory filing that it has made a provision of ₹215.21 crore, which is required by law, after it detected the fraud at its corporate banking branch in Ahmedabad.

“The fraud of ₹1,203.26 crore is being reported by bank to RBI in the accounts of the Company (SIL). Bank has already made provisions amounting to ₹215.21 crore, as per prescribed prudential norms,” it added.

Sintex Industries’s debt-restructuring plan was dismissed by lenders last year in December.

Sintex Industries Ltd, which makes textiles and yarn, belongs to the Sintex Group that makes plastic water tanks.

PNB was earlier caught in a similar, much larger scam worth ₹11,350 crore involving fugitive businessman Mehul Choksi and his nephew Nirav Modi. The scam pertained to the bank issuing a fraudulent Letter of Undertaking (LoU) to the family, making the bank liable to pay the debt amount.

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LoU is a form of a guarantee issued by a banking entity to a person concerned for availing short term credit from the overseas branch of an Indian bank.

The bank had initially named two employees for having cooperated with the fugitive businessman. However, the CBI later named former CEO of PNB Usha Ananthasubramanian, and executive directors KV Brahmaji Rao and Sanjiv Sharan as having been part of the scam.

During the investigation, Nirav Modi and his family fled to London. They were on Interpol’s wanted list for criminal conspiracy, criminal breach of trust, cheating and dishonesty including delivery of property, corruption, money laundering.

Modi was later arrested in central London and is currently in prison.

Mehul Choksi is currently in the Caribbean nation of Antigua. He claimed he had left India for medical treatment and not to avoid prosecution in the case. He also said he would return to India as soon as he was medically fit to travel.