MUMBAI: The state-run Punjab National Bank (PNB) has reported a Rs 2,434 crore loan fraud to the RBI against the former promoters of Srei Equipment Finance and Srei Infrastructure Finance.
Other lenders such as Punjab & Sind Bank, Bank of Baroda, and Union Bank of India have also earlier declared a loan fraud in connection with Srei companies.
In an exchange filing Friday, PNB said that of the total fraudulent borrowings, Rs 1,240.94 crore is related to Srei Equipment Finance and the remaining Rs 1,193.06 crore is related to Srei Infrastructure Finance.
The third largest public sector lender also said it has 100% provisions for these loans.
The bank said the declaration of these two accounts as frauds is based on a forensic audit by KPMG, which pointed to irregularities such as loans to connected parties and potential evergreening of loans.
However, Srei founder Hemant Kanoria has challenged the KPMG report as the basis for the fraud classification, noting the matter is sub-judice.
The Srei group has been undergoing an insolvency resolution process since 2021, and the National Company Law Tribunal has approved a resolution plan submitted by the National Asset Reconstruction Company in 2023.
Like DHFL and Reliance Capital, the Srei group was sent to the NCLT by the Reserve Bank in October 2021 after it had found governance issues and defaults and the regulator superseded the boards of Srei Infrastructure Finance and Srei Equipment Finance.
In February 2023, NARCL emerged as the successful bidder for SIFL and SEFL which together owed Rs 32,750 crore to lenders. Its offer prevailed over competitors Varde Partners and Arena Investors, and Authum Investment.
NARCL won the bid in February 2023, got the NCLT approval in August 2023, and finalized the acquisition by January 2024. It paid around Rs 14,301 crore in total value for the Srei accounts, including an upfront cash payment of around Rs 3,180 crore to lenders, with the rest in deferred payments and instruments like optionally convertible debentures. It has offered to make deferred payments of Rs 8,000 crore via instruments like debentures.