Karnataka Bank reports loan given to SREI Equipment Finance as fraud
Karnataka Bank has reported to the Reserve Bank of India (RBI) regarding fraud in the credit facilities extended earlier to SREI Equipment Finance Ltd.
The bank has reported an amount of Rs 12.81 crore extended to SREI Equipment Finance Ltd as fraud. This amount of part of a Rs 16,000 crore loan extended by a consortium of 19 banks in 2008.
According to an exchange filing by Karnataka Bank, the said account was declared NPA in September 2021.
The bank has also reported a fraud to RBI in respect of investment made in Non-Convertible Debentures issued by SREI Infrastructure Finance Limited amounting to Rs.10 crore, which was NPA since September 2021.
The central bank initiated the insolvency proceedings against both SREI Equipment Finance Ltd and SREI Infrastructure Finance Limited in October 2021 after a consortium of lenders led by UCO Bank sought RBI’s directions on pursuing recovery of dues from the Srei Group after loans worth about Rs 30,000 crore was identified as non-performing assets (NPA) in September.
Both the entities were referred to the National Company Law Tribunal (NCLT by the Reserve Bank of India (RBI) under section 227 read with section 239(2(zk) of the Insolvency and Bankruptcy Code (IBC), 2016 (for initiations of Corporate Insolvency Resolution Process.
Under the insolvency law, an insolvency application against a financial institution can only be filed by the RBI on behalf of the creditors.
The companies were already under stress for over last one and half years, In November 2020, the RBI had initiated an audit of its books and had identified certain borrowers with loans worth Rs 8,576 crore as connected or related parties.
As many as 14 entities/persons including Vedanta Limited and Jindal Power Limited have expressed their interest in acquiring Srei Infrastructure Finance and Srei Equipment Finance Limited.
The Committee of Creditors is likely to chose the successful bidder later this month.
Also read: Vedanta, Jindal Power among 14 entities bidding for SREI Infra Fin, SREI Equipment Finance
