Allahabad Bank tanks 15% after reporting Rs 1,775 cr fraud by Bhushan Power

Shares of Allahabad Bank tanked 15 per cent to Rs 40 on the BSE on Monday's early morning trade after the state-owned lender on Saturday reported fraud of Rs 1,775 crore by Bhushan Power and Steel to the Reserve Bank of India (RBI).

“On the basis of forensic audit investigation findings and CBI filing an FIR against the company and its directors, alleging diversion of funds from banking system by Bhushan Power and Steel (BPSL), a fraud of Rs 1,774.82 crore has been reported by the bank to the RBI,” Allahabad Bank said in a regulatory filing.

The bank said it has already made provisions amounting to Rs 900.20 crore against the bank's exposure in BPSL.

"It has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks. At present, the case is at The National Company Law Tribunal (NCLT) which is in advance stage and the Bank expects good recovery in the account," Allahabad Bank said.

At 09:30 am. the stock had partially erased its early morning loss, and was trading 9 per cent lower at Rs 43 on the BSE. In comparison, the S&P BSE Sensex was up 0.44 per cent at 38,906 points. A combined 4.95 million shares have changed hands on the counter on the NSE and BSE so far.