PNB Hit By Another Scam, Reports Fraud Of Rs 2,060-Cr By Tamil Nadu Company, Details Here

Punjab National Bank has already made provisions of Rs 824.06 crore, as per prescribed prudential rules

State-owned Punjab National Bank has reported fraud in borrowing more than Rs 2,000 crore from IL&FS Tamil Nadu Power’s NPA (non-performing asset) account. The incident happened at the Extra Large Corporate branch of the Delhi area office, the bank said. Fraud of Rs 2,060.14 crore was reported by the bank to the RBI in the accounts of the company,” PNB said in a filing. This is because the bank is already battling the infamous scam case, Nirav Modi added that the bank has already made provisions “The bank has already made provisions amounting to Rs 824.06 crore, in line with prescribed prudential regulations,” PNB said in the statement. The Punjab and Sind Bank (PSB) had said on February 15 that it had declared IL&FS Tamil Nadu Power as a bad asset with stakes above Rs 148 crore and reported it to the Reserve Bank of India. According to the bank’s policy on the determination and disclosure of material events, PSB said it declared this non-performing account (NPA) as a fraudulent account 148.86 crores was flagged as fraud and reported to RBI today under regulatory requirements,” the lender said in a regulatory filing.

IL&FS Tamil Nadu Power is a vehicle company established by Infrastructure Leasing and Financial Services Ltd (IL&FS) as part of its energy platform for the implementation of thermal power projects in Cuddalore, Tamil Nadu. Under RBI guidelines, lenders must recognize emerging strains in loan accounts, immediately upon default, by classifying these assets as Special Mention Accounts (SMA).

SMA 0 categories, according to the RBI, will be treated as a qualifying default event if payment of principal or interest or any other amount is fully or partially due within 0-30 days. SMA-1 categories are for defaulters those who will be brought into the Insolvency and Bankruptcy Code (IBC) if payment of principal or interest or any other amount is due in whole or in part within 31-60 days. Defaults in the SMA-3 category will be escalated to a National Company Law Tribunal (NCLT) case if payment is not made within 61-90 days. Resolution plans that involve restructuring or change of ownership in relation to accounts where the lender’s aggregate exposure is equal to or greater than Rs 1 billion, “shall require an Independent Credit Evaluation (ICE) of the residual debt by credit rating agencies (CRAs) specifically authorized by the Reserve Bank for this purpose,” the central bank’s rules observe.

“While accounts with an aggregate exposure of Rs 5 billion and above will require two of these ICEs, others will require one ICE. Only RPs that receive a credit rating of RP4 or better for residual debt of one or two CRAs, as a case may be, it must be taken into account for the implementation”, he specifies.

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