Punjab National Bank (PNB) said that a borrowing fraud of Rs 2,060 crore occurred in the non-performing account or NPA account of IL&FS Tamil Nadu Power Company Limited (ITPCL).
What Actually Happened
It stated that it has taken provisions of Rs 824.1 crore in accordance with prudential guidelines. In 2018, IL&FS, a non-banking financial business, defaulted on its credit commitments, putting many infrastructure projects it had sponsored in peril. At the time, the company’s debt exposure was estimated to be Rs 94,000 crore.
Intervention by the government
In October 2018, the government disbanded the former board and replaced it with a new one to monitor the NBFC’s recovery.
Uday Kotak of Kotak Mahindra Bank, Vineet Nayyar of Tech Mahindra, former Sebi chairman G N Bajpai, former ICICI Bank chairman G C Chaturvedi, and former IAS officials Malini Shankar and Nand Kishore are among the new board members.
Another bank has been robbed.
Another public sector bank, Punjab & Sind Bank, classified IL&FS Tamil Nadu as a bad asset in February, citing Rs 148 crore in unpaid dues.
PSB claimed it has declared this NPA as a fraud account and notified it to the RBI, in accordance with the bank’s policy on determining and disclosing significant events.
Punjab & Sind Bank said it had already made provisions of Rs 59.54 crore in accordance with prudential guidelines.
RBI Requirements For Fraud Reporting
RBI norms require that aside from reporting fraud cases to the central bank, banks must also submit a flash report (FR) for frauds involving amounts of Rs 5 crore and above within a week of it coming to their notice.
- Amount involved
- Nature of fraud
- Modus operandi in brief
- Name of the branch or office
- Names of parties involved
- Their constitution
- Names of proprietors, partners and directors
- Names of officials involved
- Lodging of complaint with police or agencies
About The Offending Company
IL&FS Energy Development Firm, which is a subsidiary of Infrastructure Leasing & Financial Services, created the company as a special purpose vehicle (SPV) (IL&FS).
Its job was to build thermal power plants at Cuddalore, Tamil Nadu, including a 1,200 megawatt (MW) integrated imported coal-based subcritical thermal power plant. ITPCL owes around Rs 6,700 crore to its lenders as of April 2020, and around Rs 900 crore to IL&FS Group businesses.