Published on December 27, 2025 | By LoanPao Team
In a significant development for India's banking sector, Punjab National Bank (PNB) has officially reported a borrowal fraud amounting to ₹2,434 crore to the Reserve Bank of India (RBI). The fraud is attributed to the former promoters of two prominent non-banking financial companies (NBFCs): Srei Equipment Finance Ltd (SEFL) and Srei Infrastructure Finance Ltd (SIFL).
This declaration comes four years after the RBI initiated insolvency proceedings against the Srei Group in October 2021 due to governance concerns and payment defaults. The companies, once controlled by the Kanoria family, have since been resolved under the Insolvency and Bankruptcy Code (IBC), with National Asset Reconstruction Company Ltd (NARCL) taking over in 2023.
Breakdown of the Reported Fraud
| Entity | Fraud Amount (₹ Crore) | Details |
|---|---|---|
| Srei Equipment Finance Ltd (SEFL) | 1,240.94 | Linked to erstwhile promoters; full provision made by PNB |
| Srei Infrastructure Finance Ltd (SIFL) | 1,193.06 | Linked to erstwhile promoters; full provision made by PNB |
| Total | 2,434 | No additional financial impact on PNB as 100% provisioned |
PNB has confirmed that it has already made 100% provisions for these exposures, ensuring no further hit to its balance sheet.
Background of the Srei Crisis
The Srei Group, a Kolkata-based NBFC specializing in infrastructure and equipment financing since 1989, faced severe liquidity issues leading to defaults on debts exceeding ₹32,700 crore. The RBI superseded the boards in 2021, citing governance lapses and potential evergreening of loans.
Post-resolution, NARCL acquired the entities, marking one of the largest IBC cases in the shadow banking sector. This fraud reporting by PNB may trigger further investigations by agencies like the CBI and ED.
Implications for the Banking Sector
Such cases highlight ongoing challenges in NBFC lending and the importance of robust due diligence. Banks are increasingly vigilant post major scandals, leading to improved asset quality overall. PNB's proactive provisioning reflects stronger risk management practices in 2025.
Other lenders like Bank of Baroda and Union Bank have previously flagged similar issues in Srei accounts.
Lessons for Borrowers: How to Borrow Safely in 2025
While large-scale corporate frauds grab headlines, individual borrowers can protect themselves:
- Choose Reputed Lenders: Opt for RBI-regulated banks and NBFCs with strong track records.
- Check CIBIL Score Regularly: A good score (750+) ensures better rates and approvals. Use LoanPao's free CIBIL check.
- Understand Loan Terms: Read agreements carefully to avoid hidden charges.
- Avoid Over-Borrowing: Use EMI calculators to assess affordability.
- Go Digital & Transparent: Platforms like LoanPao offer paperless, secure applications with multiple lender comparisons.
In light of such news, borrowing from trusted partners ensures peace of mind. At LoanPao, we prioritize transparency and connect you only with verified lenders for personal, home, business, and mortgage loans in Delhi NCR and India.