The settlement does create an overhang on governance perceptions and raises questions about controls within public sector banks | Photo Credit: ANUSHREE FADNAVIS
Last week, Bank of Baroda (BoB) agreed to pay $600 million (₹5,700 crore) to resolve claims linked to the collapse of UAE-based healthcare giant NMC Health, which unravelled in 2020 after the discovery of more than $6.6 billion in concealed debt. Here’s all you want to know about the case
Bank of Baroda’s Dubai operations were allegedly involved in facilitating certain transactions linked to the NMC Group fraud. The bank was made a party to the recovery proceedings as it was alleged that certain financing and lending agreements involving BoB helped facilitate or failed to detect activities that concealed NMC’s true financial position. Administrators of NMC Health alleged that BoB facilitated fictitious financing by processing credit against fabricated invoices
While BoB has denied the allegation, it chose to settle the litigation and agreed to an out-of-court settlement of about $600 million (about ₹5,700 crore) to resolve its liabilities without admitting liability in the case.
Analysts say that for years, BoB was protected by confidentiality provisions under the UAE’s 2018 anti-money laundering framework, which shielded its Suspicious Transaction Reports and internal compliance records from disclosure. That changed in October 2025 with the implementation of the UAE’s new AML law, followed by an ADGM (Abu Dhabi Global Market) court ruling in November 2025 allowing administrators access to records that could reveal internal red flags and compliance decisions. The trial began in March 2026, and by May witness testimony highlighted the bank’s reliance on customer representations. With expert scrutiny of AML standards expected and a judgment reportedly imminent, BoB opted to settle.
Siddharth Rajpurohit, Banking Analyst, Systematix, estimates “the post-tax impact at about ₹4,300 crore, which will be accounted for in the current quarter.” He said this could effectively wipe out nearly one-fifth of the bank’s profit earned in the previous financial year. The bank has about ₹2,500 crore of floating provisions, but using it, which would require RBI approval, would only defer, not eliminate, the impact on net worth. The expected quarterly profit was about ₹5,000 crore, so the settlement could significantly affect reported earnings for the quarter.
The settlement does create an overhang on governance perceptions and raises questions about controls within public sector banks. However, analysts do not see it as a bank-wide or management-led fraud. The case, according to Rajpurohit, “relates to an old matter that has now been resolved and therefore does not materially alter the long-term investment case for Bank of Baroda, although it may weigh on investor sentiment for some time.”
There may not be a direct comparable case involving an Indian bank’s overseas branch. However, analyst compare the situation broadly to the Punjab National Bank (Nirav Modi/Gitanjali Gems fraud) case, where alleged collusion enabled fraudulent transactions. The BoB case appears different because the bank itself became a party to the proceedings, whereas in many other cases banks were primarily lenders seeking recovery. Rajpurohit points out that this is different from the IndusInd Bank issue, which he described as a more centralised governance problem.
The RBI has not publicly responded to the case, though some action, including formation of an internal committee to look into the governance lapse in Bank of Baroda’s international operations, is likely in the future.
Published on July 6, 2026
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