PNB reports borrowing fraud of over ₹2,000 cr in NPA account

State-owned Punjab National Bank (PNB) has reported a borrowing fraud of over ₹2,000 crore in the non-performing account of IL&FS Tamil Nadu Power Co. Ltd.

A fraud of ₹2,060.14 crore is being reported by Bank to RBI in the accounts of the company, the Bank said in a filing

The lender further said it has already made provisions amounting to ₹824.06 crore, as per prescribed prudential norms.

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 asset related to IL&FS Tamil Nadu Power Company, with dues of over ₹148 crore.

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 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.