According to Punjab National Bank (PNB), a borrowing fraud of Rs 2,060 crore occurred in the non-performing account or non-performing loan account of IL&FS Tamil Nadu Power Company Limited (ITPCL).
It informed that it has made provisions amounting to Rs 824.1 crore as per prescribed prudential norms.
The non-banking finance company IL&FS defaulted on its loan obligations in 2018, throwing several infrastructure projects funded by it in jeopardy.
Its debt exposure at the time was reported to be Rs 94,000 crore.
In October 2018, the government removed the old board and constituted a new one to oversee the NBFC out of its crisis.
Big names like Kotak Mahindra Bank’s Uday Kotak, Tech Mahindra’s Vineet Nayyar, former Sebi chief G N Bajpai, former ICICI Bank chairman G C Chaturvedi, former IAS officers Malini Shankar and Nand Kishore became part of the new board.
Another Bank Hit By Fraud
In February, another public sector Punjab & Sind Bank had declared IL&FS Tamil Nadu a bad asset with outstanding dues of Rs 148 crore.
As per the bank’s policy on determination and disclosures on material events, PSB said it has declared this NPA as a fraud account and reported it to the RBI.
According to Punjab & Sind Bank, it has already made provisions amounting to Rs 59.54 crore, as per prudential requirements.
About The Offending Company
The company was established as a special purpose vehicle (SPV) promoted by IL&FS Energy Development Company, which in turn, is a subsidiary of Infrastructure Leasing & Financial Services (IL&FS).
Its function was to implement thermal power projects at Cuddalore in Tamil Nadu, specifically a 1,200 megawatt (MW) integrated imported coal-based subcritical thermal power plant.
As of April 2020, ITPCL owed over Rs 6,700 crore to its lenders and around Rs 900 crore to IL&FS Group entities.
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.
This FR should include the following details:
- 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