Punjab National Bank has reported a fraud of more than ₹2,000 crore to the Reserve Bank of India. The fraud is linked to the former promoters of two companies from the SREI Group.
According to PNB, the fraud involves loan accounts of SREI Equipment Finance Limited, with an amount of ₹1,241 crore, and SREI Infrastructure Finance Limited, involving ₹1,193 crore. The bank has informed that it has already made full provisions for the entire outstanding amount, meaning the financial impact has been accounted for in its books.
Both these companies were earlier resolved under the Corporate Insolvency Resolution Process, approved by the National Company Law Tribunal.
SREI Infrastructure Finance started its operations in 1989 as a company focused on financing construction equipment. Later, after the resolution plan was successfully implemented by the National Asset Reconstruction Company Limited, the company’s board was restructured in August 2023.
The insolvency process against the SREI Group companies began in October 2021, when the RBI stepped in due to serious governance issues and loan defaults of around ₹28,000 crore. The RBI had taken control by superseding the boards of both SREI Infrastructure Finance and SREI Equipment Finance.
The two Srei Group companies together had outstanding debt of ₹32,700 crore. Due to failure in repayment, insolvency proceedings were initiated against them under the Insolvency and Bankruptcy Code (IBC). In December 2023, both companies were acquired by National Asset Reconstruction Company Limited (NARCL) as the new promoter.
In October 2021, the Reserve Bank of India (RBI) removed the boards of Srei Infrastructure Finance Limited (SIFL) and its subsidiary Srei Equipment Finance Limited (SEFL) over allegations of mismanagement. Prior to this, both companies were controlled by the Kanodiya family of Kolkata. Following the board’s removal, RBI initiated IBC proceedings against the firms.
Founded in 1989 as an asset-financing NBFC, the Srei Group was led by Hemant Kanoria, who was the key face of SIFL.
PNB also shared its latest financial data. The bank’s total provisions stood at ₹643 crore in the September quarter, showing an increase compared to both the previous quarter and last year. Its Provision Coverage Ratio improved to 96.91 percent, reflecting stronger protection against bad loans.
This development highlights continued action by banks and regulators to address large loan defaults and improve financial discipline in the system.
The repeated involvement of PNB in major frauds raises serious concerns over systemic failures. Granting or continuing loans to entities already under stress and later declared insolvent defies basic banking prudence. Such decisions cannot occur without lapses not only at senior levels but also at junior officers, who prepare and process credit notes. Failures in planning, credit appraisal, and balance-sheet oversight point to collective accountability, not isolated error.
You’ve absolutely right, banks are now appointing highly qualified credit specialists, CAs, CS, and technical officers, yet accounts are still turning NPA. This is a very serious matter