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The Punjab National Bank, India's second-largest lender, announced a $ 38 billion rupiah fraud, raising questions about the health of the Indian-dominated financial system only a year after one of the biggest scandals in the country. country.
Punjab National Bank said investigators and forensic auditors had discovered an alleged fraud in the account of Bhushan Power & Steel, a steelmaker in bankruptcy.
The fraud has spread to the international, the bank said, with $ 50 million of suspected fraudulent borrowings from a branch in Dubai and an additional $ 39 million in Hong Kong. The bank said it reported the scam to the Reserve Bank of India, the country's central bank.
Bhushan Power & Steel "misappropriated bank funds, manipulated books of account to raise funds from lending banks of the consortium," the bank said in a regulatory document. Bhushan Power & Steel did not respond to a request for comment.
The Punjab National Bank, which had badets of nearly $ 113 billion, was at the center of one of the biggest political and financial controversies in India after companies badociated with the famous jeweler Nirav Modi were involved in a fraud worth $ 2 billion.
Both scandals have highlighted concerns about corporate governance standards at the heart of India's banking system, in which public lenders account for about two-thirds of bank badets.
Some economists and business leaders have called for the privatization of public lenders, arguing that publicly-controlled banks are likely to make politically motivated loan decisions, adding to a precarious pile of loans unproductive power to powerful industrialists.
The government led by Prime Minister Narendra Modi has so far resisted calls for privatization of banks, instead preferring to introduce in 2016 a new, strict bankruptcy and insolvency law designed to strengthen creditors' rights. .
The share price of the Punjab National Bank is trading less than half of its peak in early 2018, before the revelation of the Nirav Modi scandal.
Authorities have accused more than 20 people for this scandal, including the former managing director of the bank. The government is trying to extradite Mr. Modi and one of his badociates to India after they leave the country.
Bhushan Power & Steel, on the other hand, is one of 12 companies that the Reserve Bank of India has forced into bankruptcy in 2017 under the country's historic insolvency law.
But the law, hailed as a means to help banks recover quickly loans that would probably have already been lost forever, has come under heavy pressure. The cases are supposed to be resolved in 270 days, but many of them – including Bhushan Power & Steel – hang around a lot longer.
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