The second-largest public sector bank, Punjab National Bank ­(PNB) on Wednesday declares its exposure of Rs 1,023.26 crore loan as fraud to Sintex Industries Ltd. (SIL). According to the banking regulator’s rules, if the account is declared as a fraud-hit, then banks need to set aside 100 per cent of the outstanding loans as provisions either in a single go or in over four quarters. In the case of PNB, it has said that it had made a provision of Rs 215.5 crore.

The bank in a regulatory filing said, “A fraud of Rs. 1203.26 crore is being reported by the bank to the Reserve Bank of India (RBI) in the accounts of the company. The bank has already made provisions amounting to Rs 215.21 crore, as per prescribed prudential norms”. Sintex Industries is a major textile and yarn maker and is a part of Sintex group, which makes plastic water tanks. After a demerger of Sintex Industries in 2017, the plastic water tank maker was housed in another listed entity, Sintex Plastics Technology Ltd.

According to FY20 annual report, Sintex Industries said that it is undergoing substantial financial stress and severe liquidity constraints. On 3 April, the company had informed that it has defaulted on the repayment of principal amount on loans from banks and financial institutions of Rs 2,203.57 crore. Later on 8 April, Sintex said that it had defaulted in the coupon payment of the issue of its NCDs (Non-Convertible Debenture).