Indian state-owned lender PNB, which was hit by a $2 billion fraud involving billionaire Nirav Modi in 2018, had already set aside 12.5 billion rupees in provisions for the loans to DHFL, which is in bankruptcy proceedings.

Indian authorities are investigating DHFL’s promoters and its loan book to determine the extent of any fraud. (Photo: Reuters)

Punjab National Bank said on Thursday it had reported loans made to Dewan Housing Finance Corporation Ltd worth 36.89 billion rupees ($491 million) to India’s central bank as “fraud.”

Indian state-owned lender PNB, which was hit by a $2 billion fraud involving billionaire Nirav Modi in 2018, had already set aside 12.5 billion rupees in provisions for the loans to DHFL, which is in bankruptcy proceedings.

Indian banking regulations require the provision on an account affected by fraud to be 100%, made over four quarters. DHFL, which was once one of India’s top “shadow” lenders, accumulated total debts of almost 1 trillion rupees and then failed to honour dues to its creditors.

Indian authorities are investigating DHFL’s promoters and its loan book to determine the extent of any fraud.

Other banks including State Bank of India and Union Bank have also reported DHFL’s accounts as fraudulent.

Also Read | CBI books Delhi-based private firm for defrauding SBI, PNB of Rs 398 crore

Also Read | Four managers Of Punjab National Bank booked by CBI

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