The Indian PNB says it has detected a 38 billion rupee fraud

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People pass by the Brady House branch of the Punjab National Bank in Mumbai, India, on June 14, 2018. REUTERS / Francis Mascarenhas

MUMBAI (Reuters) – Indian state bank Punjab National Bank (PNB) said it had reported a loan fraud of 38.05 billion Indian rupees (556 million dollars) in Bhushan Power & Steel Ltd's account at the central bank of country.

The fraud, "the presumption of diversion of funds from the banking system", was reported to the Reserve Bank of India (RBI) on the basis of the results of the forensic audit and the federal police presented a first informative report, the PNB declared in a declaration to stock exchanges.

"It was noted that the company unduly stolen bank funds, manipulated account books to raise funds from banks of consortium lenders," PNB said, adding that it had already made provisions of 19.32 billion rupees in Bhushan's account.

The PNB was defrauded of over $ 2 billion in a separate scam that came to light last year.

Bhushan Power and Steel, one of the most indebted Indian companies, was among the top 12 companies addressed by RBI India to a bankruptcy court for a debt settlement process with the new India insolvency law.

It was not possible to reach the company for a comment on the PNB statement.

Reporting of Sankalp Phartiyal; Editing by Stephen Powell

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