State-owned Punjab National Bank (PNB) on Friday reported to the Reserve Bank of India (RBI) an alleged loan scam totaling Rs 2,434 crore perpetrated by former promoters of SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL). An amount of Rs 1,240.94 crore in cases related to SEFL and Rs 1,193.06 crore related to SIFL have been reported to RBI as lending frauds, the bank said in a regulatory filing.
There will be no additional impact on the balance sheet
According to the news, PNB clarified that 100 percent provision has already been made against the entire amount outstanding in these two accounts, which will not have any additional impact on the bank’s balance sheet. Both these companies, with total financial debt of about Rs 32,700 crore, have gone through the resolution process under the Insolvency and Bankruptcy Code (IBC). In December 2023, they were acquired by National Asset Reconstruction Company Limited (NARCL), which is now their new promoter.
turmoil in companies
It is noteworthy that in October 2021, RBI had dissolved the boards of SIFL and its wholly owned subsidiary SEFL due to alleged mismanagement and financial irregularities. Earlier, the Kolkata-based Kanoria family used to run both these companies. After the board was removed, RBI initiated action against both the companies under IBC. SREI Group started its journey in the year 1989 as an asset financing Non-Banking Financial Company i.e. NBFC. During that time Hemant Kanoria was considered the main face of SIFL.
PNB’s financial performance strong
Meanwhile, PNB’s financial performance remains strong. The bank reported a 14 per cent rise in standalone net profit at Rs 4,904 crore in the September quarter of FY 2025-26, compared to Rs 4,303 crore in the same period last year. The bank’s operating profit in the July-September quarter stood at Rs 7,227 crore. At the same time, in the period April-September (H1 FY26) it increased to Rs 14,308 crore. On annual basis, it has registered an increase of 5.46 percent and 6.51 percent respectively. This case once again underlines the increasing strictness of regulators regarding loan monitoring, risk management and corporate governance in the banking sector.
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