Punjab National Bank (PNB) has uncovered a massive loan fraud worth ₹2,434 crore linked to the former promoters of SREI Equipment Finance and SREI Infrastructure Finance. The bank reported the irregularities to the Reserve Bank of India (RBI), emphasizing the seriousness of the issue.
The fraud involves two major accounts: ₹1,241 crore in SREI Equipment Finance and ₹1,193 crore in SREI Infrastructure Finance. PNB has already made a 100% provision for the full amount, ensuring the bank’s books reflect the risk while protecting depositors.
These issues have been brewing for years. In 2021, the RBI had already stepped in, citing governance concerns and defaults, and took control of the boards of both SREI companies. Back then, both firms were facing insolvency proceedings under the Insolvency and Bankruptcy Code due to unpaid debts totaling ₹32,700 crore. In 2023, the National Asset Reconstruction Company Ltd (NARCL) took over the companies as part of the resolution process.
PNB’s disclosure may trigger investigations by law enforcement agencies, including the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED), to determine how such a large-scale misuse of funds happened. Analysts believe other banks that had exposure to the SREI group may also come under scrutiny.
Interestingly, the bank made this announcement alongside its quarterly financial results, which showed a 14% rise in net profit to ₹4,904 crore for July-September 2025. While the profit and improved asset quality are positive signs, the loan fraud highlights ongoing challenges in monitoring and managing credit risks in India’s banking sector.
The case serves as a reminder of the importance of strong governance, careful oversight, and regular monitoring of large loans. For PNB, the incident is both a challenge and an opportunity to strengthen its risk management practices while reassuring customers and investors about the safety of their deposits.
Also Read: E to E Transportation IPO opens with ₹164‑₹174 price band