New Delhi: On March 15, state-owned Punjab National Bank (PNB) said in a letter to BSE and NSE that it is reporting a borrowing fraud of over Rs 2000 crores in the non-performing (NPA) account of IL&FS Tamil Nadu Power Co. Ltd.
The bank made the disclosure under Regulation 30 of Securities Exchange Board of India (LODR) Regulations, 2015. As per the regulations, the bank has to report such events to the stock exchanges. In the letter, the bank said, “Reporting of Borrowal Fraud of Rs.2060.14 crore in NPA account of M/s IL&FS Tamil Nadu Power Co. Ltd. at Extra Large Corporate Branch at Delhi, Zonal Office: Delhi.”
It further added, “A fraud of Rs. 2060.14 Crore is being reported by Bank to RBI in the accounts of the Company. Bank has already made provisions amounting to Rs. 824.06 Crore, as per prescribed prudential norms.”
The Nirav Modi scam case was also linked to PNB.
On Tuesday, PNB shares closed 2.45% lower at ₹35.90 apiece on NSE.
A month ago, another public sector lender Punjab & Sind Bank (PSB) declared bad assets related to IL&FS Tamil Nadu Power Company, with dues of over ₹148 crores.
As per the bank’s policy on determination and disclosures on material events, PSB said it has declared this non-performing account (NPA) as a fraud account.
IL&FS Tamil Nadu Power Co. was set up as a special purpose vehicle (SPV) by the debt-laden Infrastructure Leasing & Financial Services Ltd (IL&FS) under its energy platform IEDCL for implementation of thermal power projects at Cuddalore in Tamil Nadu.
According to the RBI norms, lenders must recognise incipient stress in loan accounts, immediately on default, by classifying such assets as special mention accounts (SMA).
SMA-0 – Categories will be treated as default case fit for insolvency resolution if they fail to pay the principal or interest due on them within 0-30 days.
SMA-1 – Defaulters will be taken for Insolvency and Bankruptcy Code (IBC) if they don’t pay between 31-60 days.
SMA-3 – Firms will be treated for National Company Law Tribunal (NCLT) in case of no payment of dues within 61-90 days.
The resolution plan involving restructuring or change in ownership of accounts where the aggregate exposure of lenders is ₹100 crore and above, will require independent credit evaluation (ICE) of the residual debt by credit rating agencies (CRAs) specifically authorised by the Reserve Bank for this purpose.