Bank Going To Declare Him as A FRAUD

This classification will require banks to make provisions of 100% of the total amount due to them as per Reserve Bank of India (RBI) guideline

Lenders to troubled tour operator Cox & Kings are set to declare the exposure as a ‘fraud’ account after Price water house Coopers (PWC) submitted an audit report, sources close to development told FE.

This classification will require banks to make provisions of 100% of the total amount due to them as per Reserve Bank of India (RBI) guidelines. FE reported earlier that State Bank of India (SBI) and IndusInd Bank had already red-flagged the account in December 2019. Cox & Kings’ total dues to financial creditors stands at Rs 5,900 crore. Many banks have already provisioned 15-25% till December 2019 for the account.

A May 2015 notification of RBI states that the initial decision to classify any standard or non-performing asset (NPA) account as fraud will be taken by banks individually and it would be the responsibility of the lender to report the fraud status of the account on the Central Repository of Information on Large Credits (CRILC) platform. Banks take a decision to declare an account as fraud based on the audit report. The time allowed for the entire exercise is six months from the date when the first member bank reported the account.

Suspecting a fraud, the lenders to Cox & Kings had roped in PwC for a forensic investigation into the matter and the role of senior executives of the company. The audit report submitted to lenders have reportedly found that transactions worth Rs 21,000 crore between 2015 to 2019 were done mainly to siphon off funds.

Of all the banks, private lender Yes Bank has the largest exposure to Cox & Kings. Yes Bank has an exposure of Rs 2,267 crore, followed by Rs 1,065 crore from Axis Bank, Rs 635 crore from SBI and Rs 270 crore from IndusInd Bank. Cox & Kings has undergoing resolution at the National Company Law Tribunal (NCLT) since October 2019.

Source :Financial Express