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PNB Declares ₹2,434 Crore Loan Accounts as Fraud

Public sector lender Punjab National Bank (PNB) has classified loan accounts worth a total of ₹2,434 crore linked to two companies of the SREI Group as fraud. The bank informed the Reserve Bank of India (RBI) and the stock exchanges about the development through a regulatory filing made after market hours on Friday.

According to PNB, loan accounts related to SREI Equipment Finance Limited (SEFL) amounting to ₹1,240.94 crore and those linked to SREI Infrastructure Finance Limited (SIFL) worth ₹1,193.06 crore have been reported as fraud. The bank stated that it has already made 100 per cent provisioning for the entire outstanding amount in both cases.

In its filing, PNB said that the two SREI Group companies together had total borrowings of around ₹32,700 crore. Due to financial stress and alleged mismanagement, proceedings were initiated against them under the Insolvency and Bankruptcy Code (IBC). In December 2023, the National Asset Reconstruction Company Limited (NARCL) acquired the companies as part of the resolution process.

Earlier, in October 2021, the RBI had superseded the boards of SIFL and its wholly owned subsidiary SEFL amid allegations of serious financial irregularities and mismanagement. At the time, the companies were controlled by the Kolkata-based Kanoria family. Subsequently, the resolution process was carried forward under RBI supervision.

As the disclosure regarding the fraud classification came after market hours, its immediate impact on the stock market remained limited. On Friday, shares of PNB closed at ₹120.35 on the Bombay Stock Exchange (BSE), down 0.50 per cent.

In a separate recent exchange filing, PNB said that its asset quality has been showing signs of improvement. According to the bank, due to better recoveries and account upgrades, gross non-performing assets (NPAs) declined from ₹47,582 crore at the end of September 2024 to ₹40,343 crore by the end of September 2025.

Banking experts noted that since the bank has already fully provisioned for the concerned accounts, the long-term impact on PNB’s financial position is expected to be limited. However, such cases continue to raise concerns about regulatory oversight and corporate governance within the banking system.

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