Bank of Baroda takes `5,700 cr hit in NMC fraud reckoning

On Thursday, its shares closed at `260.25 apiece on the NSE, down 4.34%

FPJ News Service

mumbai

State-owned Bank of Baroda (BoB) has agreed to pay $600 million (approximately ₹5,700 crore) to settle long-running litigation arising from the collapse of NMC Health, bringing to a close one of the most significant cross-border legal disputes involving an Indian lender. In a regulatory filing on Thursday, the bank said it had reached an out-of-court settlement with NMC Health PLC, NMC Healthcare Ltd and NMC Holding Ltd, along with their joint administrators. The payment was made through BoB’s Abu Dhabi branch.

The dispute involved proceedings under the jurisdiction of the ADGM Courts, as well as proceedings under UK insolvency law and UAE civil law. The bank said all claims and causes of action between the parties had been resolved without any admission of liability or wrongdoing. Under the terms of the agreement, BoB’s financial exposure is limited to the settlement amount, while all other terms remain confidential. Proceedings before the ADGM courts have already been discontinued, and the related English proceedings are in the process of being withdrawn. 

The settlement draws a line under a case rooted in the dramatic collapse of NMC Health. At its peak in 2018, NMC was valued at nearly £8.6 billion and was part of the FTSE 100 index. Its downfall began in early 2020 after a short-seller report exposed more than $4 billion in previously undisclosed debt, triggering revelations of extensive accounting irregularities, hidden borrowings and serious governance failures.

The scandal quickly evolved into one of the largest corporate fraud cases in the Middle East. Joint administrators Alvarez & Marsal subsequently pursued claims worth around $5.4 billion against NMC founder B R Shetty, former chief executive Prasanth Manghat and BoB.

According to the administrators, Shetty and Manghat orchestrated a complex financial fraud involving concealed liabilities, fabricated supplier arrangements and falsified invoices used to move funds through a network of shell entities. BoB was accused of failing to maintain sufficiently robust anti-money laundering and know-your-customer controls, allegedly allowing suspicious transactions to pass through accounts linked to sham suppliers.

Court filings alleged that these entities were used to channel funds through inflated or fictitious invoices, facilitating the diversion of money to parties associated with the fraud. BoB consistently rejected these allegations, maintaining that the transactions appeared legitimate and commercially routine at the time they were processed.

Senior bank officials who testified during the trial argued that sustained collusion involving multiple employees over several years was highly implausible for an institution of BoB’s scale and governance structure.