Money laundering charges forced BoB to pay Rs 5,700 crore

Records from Abu Dhabi Global Market Courts also show the bank was working in connivance with NMC Healthcare in hushing up debts worth more than $5 billion

With Bank of Baroda (BoB) keeping stony silence on why it settled a case in Abu Dhabi Global Market Courts by paying Rs 5,700 crore, court records show that the bank was charged for working in connivance with NMC Healthcare, a healthcare chain and distribution business in the United Arab Emirates (UAE), in hushing up their debts worth more than $5 billion and for violation of anti-money laundering norms. The bank’s recent quarter profit was Rs 5,170 crore and the announcement of this settlement has tanked the bank shares.

In 2019, NMC Healthcare was accused of understating debt on its balance sheet and later it was revealed that debt of $5.4 billion had not been reported. BoB is silent on how much money its Abu Dhabi branch lost in lending money to NMC Healthcare and its 37 linked firms in West Asia.

On July 2, BoB informed the Indian stock exchanges that it paid $600 million (around Rs 5,700 crore) as part of settlement of insolvency cases of more than $5 billion against NMC Health promoters BR Shetty and Prasanth Manghat. The bank, represented by noted lawyer Harish Salve in the Abu Dhabi Global Market Courts (ADGMC), said this Rs 5,700 crore payment was part of avoiding ongoing five-year-long court cases and not admission of any guilt.

BoB, however, did not inform the Bombay and the National Stock Exchange why they decided to pay the settlement money and declared that confidential clauses of the settlement deal can’t be made public.

“The above settlement is to bring the disputes to conclusion thereby avoiding prolonged litigation, uncertainty and associated cost,” said BoB to stock exchanges after getting clearance from the Union Ministry of Finance to pay the heavy settlement cost of Rs 5,700 crore.

The Pioneer tracked down foreign court judgments, which clearly indicate that BoB was caught for violation of anti-money laundering norms and its Abu Dhabi branch worked to hush up the actual dues of NMC Healthcare. In court proceedings, Shetty accused his CEO Manghat for conniving with BoB’s officials, leading to such a huge financial burden during 2012-2020 operations.

The Administrators of Insolvency in ADGMC had alleged that BoB’s Abu Dhabi branch facilitated financing arrangements and banking transactions that allowed NMC Healthcare and related 37 entities to conceal their actual financial position.

They also claimed that the bank failed to carry out adequate anti-money laundering (AML), know-your-customer (KYC) and due diligence checks, contributing to the continuation of the alleged fraud.

“Claims are brought against Baroda [Bank of Baroda] on the basis of allegations that it acted fraudulently and without proper care in contract (under Article 246 of the Civil Code) and in tort (under Articles 282 and 285 of the Civil Code). Secondly, there are the so-called “insolvency claims”, which are made by the Joint Administrators under Section 251 of the ADGM Insolvency Regulations 2022 (the “IR 2022”) in fraudulent trading against Dr Shetty, Mr Manghat and Baroda, and under Section 252 of the IR 2022 in wrongful trading against Dr Shetty and Mr Manghat. For present purposes, it is the civil claims which are relevant: it is common ground that they are all UAE law governed. The insolvency claims are governed by ADGM law,” said the Judgment of Justice Sir Andrew Smith of Abu Dhabi Global Market (ADGM) Court of First Instance Commercial and Civil Division, dated March 25, 2025. This judgment’s number was quoted by the BoB to Stock Exchanges without explaining why it paid public money of Rs 5,700 crore as settlement.

According to many top bankers and senior officials in the Union Ministry of Finance, this order of the Abu Dhabi court indicting BoB for violation of anti-money laundering norms, fraudulent activities and connivance with NMC Healthcare led to the arbitration and finally led to a settlement to creditors of the debt-sunk NRI businessman BR Shetty’s firms by the bank paying Rs 5,700 crore.

BoB has not yet declared how much money it lend to NMC Healthcare till 2020. As per another ADGM court order dated September 27, 2020, BoB filed case against NMC Healthcare and its associates to recover their loan dues. However, the bank turned up as a co-accused along with promoters Shetty and Manghat for cheating creditors.

Interestingly, State Bank of India (SBI) and ICICI Bank and many other foreign banks filed case against the promoters to recover the loans. In October 2025, SBI was lucky to recover $46 million (around Rs 405 crore) from BR Shetty by revoking his personal guarantee. As per media reports, In October, a Dubai International Financial Centre (DIFC) court ordered Shetty to pay $46 million to SBI after finding he repeatedly lied under oath about signing a personal guarantee for a $50 million loan. Shetty, however, has maintained he was the victim of a fraud by former executives like Prasanth Manghat. However, all the three Indian banks — Bank of Baroda and SBI and ICICI Bank — never made a mandatory statement about the loan dues or about the recovery cases with NMC Healthcare to Indian authorities like the Reserve Bank of India or in their monthly statements to the credit rating agencies like TransUnion CIBIL.

Here the big question hangs fire is why Government of India allowed Bank of Baroda to pay public money of Rs 5,700 crore as settlement in Abu Dhabi-based NMC Healthcare’s insolvency case. Will the Union Ministry of Finance order a probe on BoB for dealing with Abu Dhabi-based BR Shetty’s NMC Healthcare, which resulted a huge loss of public money? Surely, this is a fit case to investigate the role of the bank’s management and board of directors for criminal trespass, the scope of investigation can cover the role of entity putting external pressure on the bank's management to settle the matter inappropriately, leading to the enormous loss of capital and reputation for the bank.