Shares of Allahabad Bank tanked over 14 percent on Monday after the public sector lender reported a fraud of Rs 1,775 crore by Bhushan Power & Steel. Punjab National Bank also reported a borrowing fraud by Bhushan Power worth Rs 3,805 crore a week ago.

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The stock fell as much as 14.5 percent to Rs 40.30 per share on BSE. At 11:45 AM, the stock was trading 10.60 percent lower at Rs 42.15 as compared to a 0.09 percent (33 points) gain in BSE Sensex at 38,769.

"We have to inform you that on the basis of Forensic Audit Investigation findings and CBI filing FIR, on suo moto basis, against the Company and its Directors, alleging diversion of funds from banking system by the Bank's borrower namely Bhushan Power and Steel Ltd. (BPSL), a fraud of 1774.82 core has been reported by the Bank to the Reserve Bank of India," the state-owned lender said in its BSE filing.

The bank added that it has already made provisions of Rs 900.2 crore against the exposure.

The filing also said that it has been observed that the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks.

At present, the case is at NCLT which is in advance stage and the Bank expects good recovery in the account.

Bhushan Power & Steel defaulted loans worth Rs 47,700 crore in 2017 and is one of the cases for resolution under Insolvency and Bankruptcy Code. The company is also facing probe by the Serious Fraud Investigation Office (SFIO).

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