After Punjab National Bank, state-run Allahabad Bank on Saturday reported a fraud of over Rs 1,774 crore by Bhushan Power and Steel (BPSL) to the Reserve Bank of India.

Allahabad Bank in a regulatory filing said the fraud has been reported on the basis of forensic audit investigation findings and a CBI case against the company and its directors, alleging diversion of funds from banking system by BPSL.

Last week, PNB had reported a fraud worth Rs 3,805.15 crore by the bankrupt steel company by misappropriating bank funds and manipulating its books of accounts. Around 85 per cent of PNB’s Rs 4,399-crore exposure to the company had been siphoned off.

Allahabad Bank further said it has been observed that the company has misappropriated bank funds, and manipulated books of accounts to raise funds from consortium lender banks.

The bank has already made provisions amounting to Rs 900.20 crore against its exposure in BPSL, it said.

At present, the case is at the National Company Law Tribunal (NCLT), which is in an advanced stage and the bank expects good recovery in the account. It is expected that more banks may report fraud committed by BPSL as the CBI complaint registered in April names several other lenders.

According to the CBI, BPSL diverted around Rs 2,348 crore through its directors and staff from the loan accounts of PNB (IFB New Delhi & IFB Chandigarh), Oriental Bank of Commerce (Calcutta), IDBI Bank (Calcutta) and Uco Bank (IFB Calcutta) into the accounts of more than 200 shell companies without any obvious purpose.

The agency said the company in doing so had misused the funds and the FIR named chairman Sanjay Singhal, vice-chairman Aarti Singhal, along with other directors as suspects.