Massive Fraud at SREI: PNB Reports Rs 2,434 Crore Loan Scam

State-owned Punjab National Bank reported a Rs 2,434 crore loan fraud to the Reserve Bank of India. The fraud was committed by former promoters of SREI Equipment Finance Ltd and SREI Infrastructure Finance Ltd. The companies, amounting to Rs 32,700 crore in financial debt, went through insolvency resolution under the IBC.

The Punjab National Bank (PNB) revealed a massive fraud amounting to Rs 2,434 crore, perpetrated by former promoters of SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL). PNB officially informed the banking regulator, the Reserve Bank of India (RBI), about the scam on Friday.

The scandal involves two entities that underwent insolvency resolution procedures under the Insolvency and Bankruptcy Code, with the National Asset Reconstruction Company Ltd (NARCL) acquiring them in December 2023. According to PNB's regulatory filings, the bank reported a borrowing fraud case of Rs 1,240.94 crore against SEFL's promoters and Rs 1,193.06 crore against SIFL's promoters.

To address the issue, the bank has allocated 100 percent provisions against the fraudulent amounts. The RBI had taken control of the boards of SIFL and SEFL in October 2021 due to alleged mismanagement, leading to IBC proceedings. Comparable financial growth data, such as a 14 percent rise in PNB's standalone net profit to Rs 4,904 crore in the September quarter of FY26, was also reported alongside operating profits for the period.

(With inputs from agencies.)