July 10, 2020 / 1:56 AM / a month ago

PNB reports $491 million DHFL loans as fraud

A woman walks past a signboard of Dewan Housing Finance Corporation Ltd. (DHFL) outside its office on the outskirts of Mumbai, India, January 31, 2019. REUTERS/Francis Mascarenhas/Files

MUMBAI (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.

($1 = 75.1212 Indian rupees)

Reporting by Nupur Anand; Editing by Alexander Smith

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