MUMBAI: Karnataka Bank has said in an exchange filing that it has classified its loans to Srei Equipment Finance as fraud. It has also reported to the RBI as a fraud the Rs 10-crore investment made by the bank in srei Infrastructure Finance, which has been an NPA since September 2021.
Earlier, the Delhi high court had restrained Punjab & Sind Bank, which had classified dues from srei group as fraud, from taking any action based on the loan reclassification.
Classification as a fraud would prevent the promoters from submitting a proposal to revive the company, which is facing insolvency proceedings. Karnataka Bank has an outstanding loan of just Rs 12.8 crore as it is a small lender in a consortium comprising 19 banks.
Financial creditors have claims of around Rs 32,000 crore against the two debt-laden companies. In the case of a fraudulent account, banks have to accelerate their provisioning, which takes a hit on their bottom lines.
Once a bank reports a loan as fraud, the lender has to take up the matter with enforcement authorities.
In October 2021, the RBI filed an application for initiation of corporate insolvency resolution process against Srei Infrastructure Finance and Srei Equipment Finance.
Earlier, the Delhi high court had restrained Punjab & Sind Bank, which had classified dues from srei group as fraud, from taking any action based on the loan reclassification.
Classification as a fraud would prevent the promoters from submitting a proposal to revive the company, which is facing insolvency proceedings. Karnataka Bank has an outstanding loan of just Rs 12.8 crore as it is a small lender in a consortium comprising 19 banks.
Financial creditors have claims of around Rs 32,000 crore against the two debt-laden companies. In the case of a fraudulent account, banks have to accelerate their provisioning, which takes a hit on their bottom lines.
Once a bank reports a loan as fraud, the lender has to take up the matter with enforcement authorities.
In October 2021, the RBI filed an application for initiation of corporate insolvency resolution process against Srei Infrastructure Finance and Srei Equipment Finance.
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