Allahabad Bank gets "Bhushaned!"

Allahabad Bank is the top loser on the BSE currently, going down 14.5% to Rs.40.30. The stock has in fact been losing for the past 4 days. Its 52-week low is at Rs.33.25.

On 13th July, Saturday, the Bank announced fraud by Bhushan Power. It stated that based on the Forensic Audit Investigation findings and CBI filing FIR, on suo moto basis, against the Company and its Directors, alleging diversion of funds from banking system by the Bank's borrower namely Bhushan Power and Steel Ltd. (BPSL), a fraud of Rs.1774.82 core has been reported by the Bank to the Reserve Bank of India.

The Bank said that it has already made provisions amounting to Rs.900.20 crore against the exposure of the Bank in BPSL.

 It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks. At present, the case is at NCLT which is in advance stage and the Bank expects good recovery in the account.

Last week, PNB also reported fraud by the same company to the tune of Rs.3805 crore.

In the coming days, more banks are expected to report fraud by Bhushan Power.