Bank of Baroda to pay $600 million to settle NMC Health insolvency claims
Mumbai: Bank of Baroda (BoB) has agreed for a settlement of $600 million (around Rs 5700 crore) to the administrators of the insolvent UAE based
Mumbai: Bank of Baroda (BoB) has agreed for a settlement of $600 million (around Rs 5700 crore) to the administrators of the insolvent UAE based NMC Health Plc and its affiliates because it was made a party to the case for being in cohort with the defaulter BR Shetty and the company by allowing transactions without doing due diligence and following proper anti money laundering (AML), know your customer (KYC) processes, people familiar with the details said.In a notice to the stock exchanges on Thursday, BoB said that the bank has agreed to resolve claims by NMC Health PLC, NMC Healthcare Ltd, NMC Holding Ltd, and their respective joint administrators, by paying $600 million after a settlement agreement between them. The bank did not reveal the details of the settlement agreement and its terms.Rohan Mandora, analyst at Equirus Securities said the settlement was agreed after the administrator and global insolvency resolution company Alvarez & Marsel (A&M) made the bank a party to the recovery process. “A&M alleges the bank was grossly negligent for failing to follow proper AML/KYC procedures, continued processing payments it knew were fraudulent, and failed to conduct due diligence on accounts for "sham" suppliers used for pass-through payments via fake invoices,” Mandora said in the note after the bank issued the stock exchange disclosure.
The bank’s shares fell 4% to Rs 260 a piece after this disclosure by the bank.A person familiar with the matter said that the bank chose to settle the claims rather than prolong the matter. “The whole premise is that the banks did not stop these fraudulent activities and was in cohorts with the promoters and other officials of NMC which makes it liable to pay up to the other stakeholders in this case. The fraud was established and the bank also did not do its duty and inform other creditors because of which they had to face losses,” said the person.A second person aware of the details said that BoB had to pay because transactions were routed through their bank accounts. "The settlement covers claims of other creditors. The administrators have taken a view that all transactions were routed through BoB and they were authorizing payments that were not in sync with anti-money guidelines. This is viewed as an ‘Act of negligence’ or ‘collusion with promoters.',” said a second person aware of the details.The $600 million payout by BoB is more than double the $253 million exposure the bank had reported when the account went to insolvency in 2020.
To put it into context, the settlement amount by BoB is almost equal to the Rs 5,616 crore net profit the bank reported in the fourth quarter ended March 2026. A bank spokesperson did not reply to specific queries on the bank’s payout and its impact on the quarterly results.Though the bank has given little details in its disclosure, the case finds a mention in the bank’s annual report released late May in which the bank said that administrators of entities within the NMC Group have filed legal proceedings against Dr. BR Shetty, former CEO Prashant Manghat and BoB before the Abu Dhabi Global Market (ADGM) court of first instance and England & Wales High Court arising out of their insolvency.“The trial in the ADGM proceedings began on 23 March 2026 and is underway. The proceedings in England have been stayed to await the outcome of the ADGM proceedings. The insolvency is said to have arisen due to discovery of fraud perpetrated by shareholders, senior management and employees of the group between the years 2012-2020…The Bank denies all allegations made against it and has filed a robust defence (on facts and law) in both proceedings.
The BriefWire