Reuters
Published Jul 13, 2019 11:31AM ET
India's Allahabad Bank reports $259 mln alleged fraud by bankrupt steelmaker
NEW DELHI (Reuters) - India's Allahabad Bank (NS:ALBK) on Saturday became the second Indian state-owned bank to report a major alleged fraud by bankrupt steelmaker Bhushan Power & Steel Ltd this month, adding to concerns about a banking industry burdened with bad debts.
Allahabad Bank said in a statement that it had told the Reserve Bank of India, the nation's central bank, that it had identified a fraud worth $259 million in Bhushan's accounts.
On July 6, state-run Punjab National Bank (PNB) said it had reported an alleged fraud of $554.6 million in the steelmaker's accounts.
"It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks," Allahabad Bank said in its statement, adding that it had made provisions of about $131 million against the bank's exposure.
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 India's new insolvency law.
Prime Minister Narendra Modi's government introduced new bankruptcy resolution rules in 2016 to help with faster resolution of bad loans, but litigation has tied down some big restructuring deals.
To revive the banking sector the Indian government has injected about $36 billion of taxpayers' money into the banks in the past five years and initiated an asset quality review by the central bank.
Only about 5% of the stressed assets of banks have so far been dealt with through the bankruptcy process.
Bhushan Power & Steel could not be immediately reached for comment on the latest allegation.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.