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Karnataka Bank reports Srei Equipment Finance dues as fraud

Karnataka Bank reports Srei Equipment Finance dues as fraud


Karnataka Bank has declared its outstanding dues of around ₹12.81 crore to Srei Equipment Finance as fraud and reported this to the Reserve Bank of India. It has also reported a fraud with respect to ₹10 crore invested in non-convertible debentures issued by SREI Infrastructure Finance Ltd, which was a non-performing asset (NPA) since September 2021.

“Both the exposures have been fully provided for and, as such, there will not be any impact on the financials of the bank going forward,” the bank said in a notification to stock exchanges on Wednesday.

The move comes just a month after Punjab & Sind Bank declared as fraud outstanding dues of around ₹1,234 crore to Srei group firms Srei Infrastructure Finance and Srei Equipment Finance. The Delhi High Court, however, had restrained the bank from taking any action against Srei Group companies on the basis of the declaration.

Hemant Kanoria, founder and erstwhile director of Srei, had filed a petition challenging the bank’s decision to declare the account as fraud. The Delhi High Court order restraining Punjab & Sind Bank from taking any action prejudicial to the petitioner (Srei) was expected to dissuade other banks from declaring the account as fraud.

However, with Karnataka Bank going ahead with it, more banks could follow suit, a senior industry official said.  

The Kolkata bench of NCLT had, on October 8, okayed the start of insolvency proceedings against the two companies after the RBI filed insolvency applications against them.

The RBI-appointed administrator has admitted claims of around ₹31,868 crore of the nearly ₹34,223 crore claimed by financial creditors to Srei Equipment Finance Ltd (SEFL). He had also admitted claims to the tune Rs ₹257 crore from financial creditors to Srei Infrastructure Finance.

Big corporates including Vedanta and Jindal Power, and asset reconstruction companies such as Assets Care and Reconstruction Enterprise, JM Financial Asset Reconstruction Company and Asset Reconstruction Company (India) (ARCIL) feature in the provisional list of prospective resolution applicants for the Srei Group companies.

Published on


May 11, 2022



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