Via Reuters Finance

People walk past Punjab National Bank’s Brady House branch in Mumbai, India June 14, 2018. REUTERS/Francis Mascarenhas

MUMBAI (Reuters) – India’s state-run Punjab National Bank (PNB) on Saturday said it had reported a borrowing fraud of 38.05 billion Indian rupees ($556 million) in Bhushan Power & Steel Ltd’s account to the country’s central bank.

The fraud, “alleging diversion of funds from the banking system” was being reported to the Reserve Bank of India (RBI) on the basis of the findings of forensic audit and the federal police filing a first information report, the PNB said in a statement to stock exchanges.

“It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks,” PNB said, adding that it had already made provisions of 19.32 billion rupees in Bhushan’s account.

PNB has been defrauded of over $2 billion in a separate scam that came to light last year.

Bhushan Power and Steel, one of India’s most indebted companies, was among the first 12 companies referred by the RBI India to a bankruptcy court for a debt resolution process under India’s new insolvency law.

The company could not be reached for comment on the PNB statement.

Reporting by Sankalp Phartiyal; Editing by Stephen Powell

READ ALSO  China to impose temporary anti-dumping measures on Australian wine imports