PNB reports Rs 2,434 crore loan fraud against erstwhile promoters of Srei Group to RBI

People walk past Punjab National Bank's Brady House branch in Mumbai

State-owned Punjab National Bank on Friday reported a loan fraud of Rs 2,434 crore committed by former promoters of SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL) to the banking sector regulator, the Reserve Bank.

These two entities with financial debt amounting to Rs 32,700 crore went through resolution under the Insolvency and Bankruptcy Code and the new promoter National Asset Reconstruction Company Ltd (NARCL) acquired them in December 2023.

The bank has reported a case of borrowing fraud to the RBI against the erstwhile promoters of SEFL and SIFL, amounting to Rs 1,240.94 crore and Rs 1,193.06 crore, respectively, PNB said in a regulatory filing. The bank has already made 100 per cent provisions against the entire outstanding amount, it said.

The Reserve Bank of India, in October 2021, superseded the boards of SIFL and its wholly-owned subsidiary SEFL. The Kolkata-based Kanorias previously controlled the twin companies, SIFL and SEFL, until the RBI superseded their boards over alleged mismanagement and subsequently initiated IBC proceedings.

SREI began its journey in 1989 as an asset financing NBFC, with Hemant Kanoria as the key face of SIFL. PNB had reported a 14 per cent rise in standalone net profit at Rs 4,904 crore for the September quarter of FY26 as against Rs 4,303 crore in the year-ago period. Operating profit in July-September was at Rs 7,227 crore and Rs 14,308 crore in April-September (H1) FY26, recording a growth of 5.46 per cent and 6.51 per cent, respectively on year-on-year basis.