New Delhi: After Punjab National Bank (PNB), another state-owned lender Allahabad Bank Saturday reported a fraud of over ₹1,774 crore by Bhushan Power and Steel to the Reserve Bank of India.

In a regulatory filing, Allahabad Bank said on the basis of the findings of the forensic audit investigation and the CBI's FIR against the company and its directors, alleging diversion of funds from banking system by Bhushan Power and Steel Ltd (BPSL), a fraud of ₹1,774.82 core has been reported by the bank to the RBI.

Last week, PNB reported a fraud worth ₹3,805.15 crore by Bhushan Power and Steel.

Around 85% of PNB's ₹4,399 crore exposure to the company had been siphoned off.

It has been observed that the company misappropriated bank funds, and manipulated books of accounts to raise funds from the consortium of banks, Allahabad Bank said.

The bank has already made provisions amounting to ₹900.20 crore against exposure of the bank in Bhushan Power and Steel.

At present, the case is in the National Company Law Tribunal (NCLT), which is in an advance stage and the bank expects good recovery in the account.

It is expected that more banks would report fraud committed by Bhushan Power and Steel as the CBI complaint registered in April named several other lenders.

According to the CBI, Bhushan Power and Steel diverted around ₹2,348 crore through its directors and staff from the loan accounts of PNB (IFB New Delhi & IFB Chandigarh), Oriental Bank of Commerce (Kolkata), IDBI Bank (Kolkata) and UCO Bank (IFB Kolkata) into the accounts of more than 200 shell companies without any obvious purpose.

The agency said that the company in doing so had misused the funds and the FIR named chairman Sanjay Singhal, vice-chairman Aarti Singhal, along with other directors as suspects.

"It was further alleged that the said Company availed various Loan facilities from 33 banks/financial institutions during the year 2007 to 2014 to the tune of ₹47,204 crore (approx) and defaulted on repayments. Subsequently, lead bank PNB declared the account as NPA followed by other banks and financial institutions," the CBI had stated.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed

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