Allahabad Bank stock drops 8% after reporting Rs 1,775-crore fraud

State-owned Allahabad Bank shares dropped nearly 8 per cent on Monday after the lender reported a Rs 1,775-crore fraud by Bhushan Power and Steel, to the RBI.

Shares of the company plunged 7.74 per cent to close at Rs 43.50 on the BSE. Intra-day, the stock tumbled 14.52 per cent to Rs 40.30. On the NSE, the scrip dropped 7.74 per cent to close at Rs 43.50. Market valuation of the public sector bank dipped Rs 1,357.53 crore to Rs 16,189.47 crore on the BSE.

Allahabad Bank is the second state-owned lender to report a fraud by Bhushan Power and Steel Ltd (BPSL), to the RBI. Earlier this month, Punjab National Bank (PNB) reported a fraud worth Rs 3,805.15 crore by BPSL by misappropriating bank funds and manipulating its books of accounts.

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Allahabad Bank in a regulatory filing on Saturday said that on the basis of forensic audit investigation findings and CBI filing FIR against the company and its directors, alleging diversion of funds from banking system by BPSL, a fraud of Rs 1,774.82 crore has been reported by the bank to the RBI.

Allahabad Bank further said it has been observed that the company has misappropriated bank funds, and manipulated books of accounts to raise funds from consortium lender banks.