Allahabad Bank Alleges Rs. 1,700 Crore Fraud By Firm

New Delhi: Allahabad Bank on Saturday became the second state-owned bank to report a major alleged fraud by bankrupt steelmaker Bhushan Power & Steel Ltd this month.

Allahabad Bank said in a statement that it had told the Reserve Bank of India (RBI) that it had identified a fraud worth over Rs. 1,700 crore in Bhushan’s accounts.

On July 6, state-run Punjab National Bank (PNB) said it had reported an alleged fraud of over Rs. 3,700 crore in the steelmaker’s accounts.

“It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks,” Allahabad Bank said in its statement, adding that it had made provisions of about Rs. 890 crore against the bank’s exposure.

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

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