Punjab National Bank reports Rs 1,203 crore fraud by Sintex Industries

NEW DELHI:  Punjab National Bank on Wednesday declared its exposure of Rs 1,203.26 crore to Sintex Industries Ltd (SIL) as fraud. The lender added that it has already made provisions amounting to Rs 215.21 crore toward the exposure, as per prescribed prudential norms. 

RBI norms mandate banks to set aside up to 100 per cent as provision on a fraud-hit account. This provision can be made over a period of a few quarters. “A fraud of Rs 1,203.26 crore is being reported by the Bank to the RBI in the accounts of the Company (SIL),” the bank said in a late night notification to exchanges. The fraud was reported at the bank’s large corporate branch at Ahmedabad.

In a separate notification earlier in the day, stressed textile firm Sintex Industries said it has defaulted on debt repayment to the tune of Rs 49.54 crore to a total of 10 investors. Of this, Rs 45.84 crore related to the principal amount, while Rs 3.7 crore pertains to interest that was due. Other lenders to Sintex include Bank of Baroda, Canara Bank, Punjab and Sind Bank, and Bank of India. Its total debt stood at Rs 7,358.88 crore as of June-end.

Under Reserve Bank of India norms, Once a bank declares an account as fraud-hit, it will have to make up to 100 per cent provision either in one shot or over a period of four quarters.  

Provision refers to the amount which the banks need to set aside for potential losses.

(With Online Desk inputs)