State-owned lender Punjab National Bank has reported a fraud in borrowing worth over Rs 2,000 crore in the NPA (non-performing asset) account of IL&FS Tamil Nadu Power. The incident has happened at the Extra Large Corporate Branch in Delhi zonal office, the bank said. “A fraud of Rs 2,060.14 crore is being reported by the bank to the RBI in the accounts of the company,” PNB said in a filing. This comes as the bank already fights the infamous case of the Nirav Modi scam. It added that the bank has already made provisions amounting to Rs 824.06 crore. “The bank has already made provisions amounting to Rs 824.06 crore, as per prescribed prudential norms,” PNB said in the disclosure.
Earlier, the Punjab & Sind Bank (PSB) had said on February 15 that it had declared IL&FS Tamil Nadu Power as bad asset with dues of over Rs 148 crore, and reported it to the Reserve Bank of India. As per the bank’s policy on determination and disclosures on material events, PSB said it has declared this non-performing account (NPA) as a fraud account. “It is informed that an NPA account, viz IL&FS Tamil Nadu Power Company Ltd with outstanding dues of Rs 148.86 crore has been declared as fraud and reported to RBI today as per regulatory requirement,” the lender had said in a regulatory filing.
IL&FS Tamil Nadu Power is a special purpose vehicle that was set up by Infrastructure Leasing & Financial Services Ltd (IL&FS) under its energy platform for implementation of thermal power projects at Cuddalore in Tamil Nadu.
As per the RBI guidelines, lenders shall recognise incipient stress in loan accounts, immediately on default, by classifying such assets as special mention accounts (SMA).
SMA 0 categories, as per the RBI, will be treated as default case fit for resolution if the principal or interest payment or any other amount is wholly or partly overdue between 0-30 days. SMA-1 Categories are for those defaulters those who will be taken to Insolvency and Bankruptcy Code (IBC) if the principal or interest payment or any other amount is wholly or partly overdue between 31-60 days. SMA-3 Category defaulters will be forwarded with a National Company Law Tribunal (NCLT) case if the payment is not made between 61-90 days.
Resolution Plans involving restructuring or change in ownership in respect of accounts where the aggregate exposure of lenders is Rs 1 billion and above, “shall require independent credit evaluation (ICE) of the residual debt by credit rating agencies (CRAs) specifically authorised by the Reserve Bank for this purpose,” the central bank rules note.
“While accounts with aggregate exposure of Rs 5 billion and above shall require two such ICEs, others shall require one ICE. Only such RPs which receive a credit opinion of RP4 or better for the residual debt from one or two CRAs, as the case may be, shall be considered for implementation,” it says.
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