Allahabad Bank plunges 15% on reporting Rs 1,775 crore fraud

Shares of Allahabad Bank declined nearly 15 per cent on Monday after the lender on Saturday reported a fraud of over Rs 1,774 crore by Bhushan Power and Steel to the Reserve Bank of India.

The public sector bank in a regulatory filing said on the basis of forensic audit investigation findings and CBI filing FIR against the company and its directors, alleging diversion of funds from banking system by Bhushan Power and Steel (BPSL), a fraud of Rs 1,774.82 crore has been reported by the bank to the Reserve Bank.

The bank also said that it has been observed that the company has misappropriated bank funds, and manipulated books of accounts to raise funds from consortium lender banks.


Allahabad Bank has already made provisions amounting to Rs 900.20 crore against exposure of the bank in BPSL, it said.

Last week, Punjab National Bank (PNB) also reported a fraud worth Rs 3,805.15 crore by the bankrupt steel company BPSL by misappropriating bank funds and manipulating its books of accounts. Shares of PNB were trading 0.66 per cent down at Rs 74.85 at around the same time.

The shares of the bank closed 7.74 per cent lower at Rs 43.50 on BSE.