Allahabad Bank shares plummet 14% on reporting Bhushan Power fraud

State-run Allahabad Bank’s shares saw a steep fall on Monday after the bank reported fraud of Rs 1,775 crore. Allahabad Bank’s shares fell sharply by 14.5 per cent to Rs 40.30 per share after it informed the exchanges that it has been defrauded by Bhushan Power & Steel to the tune of Rs 1,775 crore. Today, on BSE, the bank’s shares opened at Rs 42 per share against the previous close of Rs 47.15 per share, while on NSE, the shares opened at Rs 41.70 per share as against the last close of Rs 47.15 per share.  

On the basis of Forensic Audit Investigation findings and CBI filing FIR, on suo moto basis, against the company and its directors, alleging diversion of funds from the banking system by Bhushan Power & Steel, a fraud of Rs 1,774.82 crore has been reported by Allahabad Bank to the Reserve Bank of India, according to the exchange filing.

The company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks. At present, the case is at NCLT which is in advance stage and the Bank expects a good recovery in the account. The bank has already made provisions amounting to Rs 900.20 crore against the exposure of the Bank in Bhushan Power & Steel, Allahabad Bank further said in a regulatory filing. 

Allahabad Bank has already made provisions amounting to Rs 900.20 crore against the exposure of the bank in Bhushan Power and Steel, it informed the exchanges. Last week, another state-run Punjab National Bank also reported a fraud of Rs 3,805.15 crore by Bhushan Power & Steel. According to reports, more banks will report about the misappropriation of funds by the bankrupt company. Bhushan Power & Steel is one of the 12 large loan accounts that the banks referred to NCLT.

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