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PNB classifies Rs 2,060 crore to IL&FS Tamil Nadu Power as fraud

According to a rating report by Care Ratings, dated June 29, 2021, IL&FS Tamil Nadu Power owes banks Rs 5,584.93 crore.

The lender has made provisions worth Rs 824.06 crore against its exposure to the company.
The lender has made provisions worth Rs 824.06 crore against its exposure to the company.

Punjab National Bank (PNB) on Tuesday said that it has classified its Rs 2,060.14 crore exposure to IL&FS Tamil Nadu Power as a fraud account. The lender has made provisions worth Rs 824.06 crore against its exposure to the company.

“A fraud of Rs 2,060.14 crore is being reported by bank to RBI (Reserve Bank of India) in the accounts of the company. Bank has already made provisions amounting to `824.06 crore, as per prescribed prudential norms,” PNB said in a notification to the exchanges.

Last month, Punjab & Sind Bank had also classified the same account as fraud. Its exposure to IL&FS Tamil Nadu Power is Rs 148 crore.

IL&FS Tamil Nadu Power is a special purpose vehicle (SPV) promoted by IL&FS Energy Development Company, which in turn, is a subsidiary of Infrastructure Leasing & Financial Services (IL&FS). The company had set up a 1,200 megawatt (MW) integrated imported coal-based subcritical thermal power plant in Cuddalore, Tamil Nadu.

According to a rating report by Care Ratings, dated June 29, 2021, IL&FS Tamil Nadu Power owes banks Rs 5,584.93 crore.

RBI norms state that in addition to reporting cases of fraud to the regulator, banks must also submit a flash report (FR) for frauds involving amounts of Rs 5 crore and above within a week of such frauds coming to the notice of the bank’s head office. The FR should include the amount involved, nature of fraud, modus operandi in brief, name of the branch or office, names of parties involved, their constitution, names of proprietors, partners and directors, names of officials involved and lodging of complaint with police or agencies.

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