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After Nirav Modi, another scam rocks PNB

PSU banking major Punjab National Bank (PNB) said it has detected a fraud of more than ₹ 3,800 crore by Bhushan Power & Steel Ltd. and has reported it to the RBI.

In a regulatory filing PNB said that on the basis of a forensic audit conducted and an FIR filed by the CBI, it had detected the fraud and promptly reported it to RBI.

PNB has accused Bhushan Power & Steel and its directors of misappropriating bank funds and manipulating books of accounts to raise funds from a consortium of bank lenders.

The chart depicts a break-up of the total exposure that PNB has to Bhushan Power & Steel.

Its domestic exposure stands at ₹ 3,192 crores and its overseas exposure at ₹ 346 crores at Dubai branch and ₹ 268 crores at Hong Kong branch which totals to ₹ 3,805 crores. The lender added that that it has already made provisions to the tune of ₹ 1,932 crores as per RBI norms and further added that the case is presently with the NCLT and the bank expects a good recovery in the account.

The second largest state run bank has reported a new fraud at a time when it is just recovering from the ₹ 13,400 crore mega banking fraud perpetrated against it by diamond merchants Nirav Modi and his uncle Mehul Choksi a little more than a year ago.

Shares of the bank ended 11.25% lower in reaction to these allegations ending today’s trading session at ₹ 72.60 per share.

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