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Karnataka Bank reports Srei Equipment Finance fees as fraud

Karnataka Bank has declared its outstanding contingency of around ₹ 12.81 crore to Srei Equipment Finance as fraud and reported this to the Reserve Bank of India. It has also reported a fraud of ₹ 10 crore invested in non-convertible debentures issued by SREI Infrastructure Finance Ltd, which was a defaulted asset (NPA) since September 2021.

“Both exposures are fully provided and as such, there will be no impact on the bank’s financial situation in the future,” the bank said in a statement to stock exchanges on Wednesday.

The move comes just a month after Punjab & Sind Bank declared outstanding fees of around £ 1,234 in the Srei group Srei Infrastructure Finance and Srei Equipment Finance as fraud. However, the Delhi High Court had prevented the bank from taking action against Srei Group companies on the basis of the statement.

Hemant Kanoria, founder and former director of Srei, had filed a lawsuit challenging the bank’s decision to declare the account a fraud. The Delhi High Court ruling preventing Punjab & Sind Bank from taking any action detrimental to the petitioner (Srei) was expected to deter other banks from declaring the account as fraudulent.

But when Karnataka Bank goes ahead with it, more banks could follow suit, a senior industry official said.

The Kolkata bench of the NCLT had on October 8 approved the start of insolvency proceedings against the two companies after the RBI filed for insolvency proceedings against them.

The RBI-appointed administrator has admitted claims of around DKK 31,868 million. INR of the almost 34,223 mill. INR, which financial creditors demanded from Srei Equipment Finance Ltd (SEFL). He had also admitted claims of 257 million. Rs from financial creditors to Srei Infrastructure Finance.

Large companies, including Vedanta and Jindal Power, and asset recovery companies such as Assets Care and Reconstruction Enterprise, JM Financial Asset Reconstruction Company and Asset Reconstruction Company (India) (ARCIL) are on the preliminary list of potential settlement applicants for the Srei Group companies.

Published on

May 11, 2022

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