Did PNB Uncover a Rs 2,434 Crore Loan Fraud by Former Srei Promoters?
Click to start listening
Synopsis
Punjab National Bank has revealed a major loan fraud involving Rs 2,434 crore linked to Srei firms' former promoters. This case raises questions about governance and accountability in the finance sector, stirring public interest. Can this fraud revelation lead to significant repercussions for the involved parties?
Key Takeaways
- PNB has reported a significant loan fraud of Rs 2,434 crore.
- The fraudulent amounts are split between Srei Equipment Finance and Srei Infrastructure Finance.
- The fraud declaration is based on findings from a forensic audit.
- Other banks have also flagged frauds connected to Srei companies.
- The Srei group is undergoing insolvency resolution.
In a significant development from New Delhi, dated December 27, Punjab National Bank (PNB) has reported an alleged loan fraud amounting to Rs 2,434 crore involving the previous promoters of Srei Equipment Finance and Srei Infrastructure Finance. In an evening exchange disclosure, the state-owned PNB stated, "As per the relevant provisions of SEBI (LODFR) Regulations, 2015, along with the Bank’s Policy for identifying material events/information to be reported to the Stock Exchanges, we inform that the bank has reported borrowing fraud to the RBI against the former promoters of Srei Equipment Finance and Srei Infrastructure Finance."
PNB detailed that of the total fraudulent amounts, Rs 1,240.94 crore pertains to Srei Equipment Finance while the remainder of Rs 1,193.06 crore is linked to Srei Infrastructure Finance.
The public sector bank confirmed that it has made 100 percent provisions for these loans. The fraud declaration for these two accounts is based on a forensic audit that uncovered irregularities such as loans extended to connected parties and possible loan evergreening.
However, Hemant Kanoria, the founder of Srei, has contested the findings of the forensic audit, asserting that the matter is currently sub judice.
Additionally, other banks including Punjab & Sind Bank, Bank of Baroda, and Union Bank of India have previously noted loan frauds associated with Srei companies.
The Srei group has been entangled in an insolvency resolution process since 2021, with the National Company Law Tribunal endorsing a resolution plan put forth by the National Asset Reconstruction Company in 2023. The Reserve Bank referred the Srei group to the NCLT in October 2021 due to governance issues and defaults, subsequently superseding the boards of both Srei Infrastructure Finance and Srei Equipment Finance.
In February 2023, the NARCL emerged as the successful bidder for SIFL and SEFL, which together owed Rs 32,750 crore to lenders. The bid was secured in February 2023, received NCLT approval in August 2023, and is expected to finalize by January 2024.
Point of View
It's vital to recognize the implications of this alleged fraud by Srei's former promoters on the banking sector and investor trust. The ongoing insolvency process and the forensic audit's findings signal a deeper need for regulatory scrutiny in financial dealings, highlighting the essential balance between growth and governance.
NationPress
27/12/2025
Frequently Asked Questions
What is the total amount involved in the alleged fraud?
The total amount reported in the alleged fraud is Rs 2,434 crore.
Which banks have reported loan frauds related to Srei?
Banks such as Punjab & Sind Bank, Bank of Baroda, and Union Bank of India have also declared loan frauds linked to Srei companies.
What triggered the insolvency proceedings for the Srei group?
The insolvency proceedings for the Srei group were initiated due to governance issues and defaults identified by the Reserve Bank.
What is the status of the resolution plan for Srei?
The National Company Law Tribunal has approved a resolution plan submitted by the National Asset Reconstruction Company for Srei in 2023.
What are the main findings of the forensic audit?
The forensic audit revealed irregularities, including loans extended to connected parties and potential evergreening of loans.
