Fraud of Rs. 2060.14 crore is reported by the bank to RBI in the accounts of IL&FS Tamil Nadu Power
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Public lender Punjab National Bank has reported fraud in borrowing worth more than Rs 2,000 crore from IL&FS Tamil Nadu Power’s NPA (non-performing asset) account. The incident happened at the Extra Large Corporate branch of the Delhi area office, the bank said. “Fraud of Rs 2,060.14 crore is reported by the bank to the RBI in the accounts of the company,” PNB said in a filing. This comes as the bank is already fighting the infamous case of the Nirav Modi scam. He added that the bank has already made provisions amounting to Rs 824.06 crore. “The bank has already made provisions amounting to Rs 824.06 crore, in line with prescribed prudential standards,” PNB said in the disclosure.
Earlier, Punjab & Sind Bank (PSB) said on Feb. 15 that it had declared IL&FS Tamil Nadu Power as a bad asset with dues over Rs 148 crore, and reported it to the Reserve Bank of India. In accordance with the bank’s policy on the determination and disclosure of material events, PSB has declared that it has declared this non-performing account (NPA) as a fraudulent account. “It is advised that an NPA account i.e. IL&FS Tamil Nadu Power Company Ltd with unpaid dues of Rs 148.86 crore has been declared as fraud and reported to RBI today as per regulatory requirements,” the lender had said. in a regulatory file.
IL&FS Tamil Nadu Power is a special purpose vehicle established by Infrastructure Leasing & Financial Services Ltd (IL&FS) as part of its energy platform for the implementation of thermal power projects in Cuddalore in Tamil Nadu.
In line with RBI guidelines, lenders must recognize incipient stress in loan accounts, immediately upon default, by classifying these assets as Special Mention Accounts (SMA).
SMA 0 categories, according to the RBI, will be treated as a resolvable default case if payment of principal or interest or any other amount is wholly or partially overdue between 0 and 30 days. SMA-1 categories are for defaulters those who will be brought to the Insolvency and Bankruptcy Code (IBC) if payment of principal or interest or any other amount is wholly or partially overdue between 31 and 60 days. SMA-3 defaulters will be returned with a National Company Law Tribunal (NCLT) filing if payment is not made between 61 and 90 days.
Resolution plans involving restructuring or change of ownership relating to accounts where the lenders’ aggregate exposure is Rs 1 billion and above, “will require Independent Credit Assessment (ICE) of residual debt by rating agencies (ARC) specifically authorized by the Reserve Bank for this purpose,” the central bank’s rules note.
“While accounts with an aggregate exposure of Rs 5 billion and above will require two of these ICEs, others will require one ICE. Only PRs who receive a credit opinion of RP4 or better for residual debt from one or two CRAs, as applicable, will be considered for implementation,” it says.