PNB Scam: Punjab National Bank to monetise real estate assets, including New Delhi office worth 50 billion rupees

New Delhi: The fraud-hit Punjab National Bank is considering monetising its real estate assets, including its giant office space in New Delhi worth an estimated 50 billion rupees ($778.63 million), a bank source with direct knowledge of the matter told wire agency Reuters.

The bank would look at selling these assets through a tendering process. “We are in talks with interested parties,” said the source, who declined to be identified. Morgan Stanley estimated on Thursday if PNB had to assume all the liability from the fraud it would need 80 billion rupees ($1.25 billion) in additional capital, which at the stock’s current valuation means a 14 percent dilution.

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First RBI response

The Reserve Bank of India has carried out an assessment of the control systems at the Punjab National Bank, the central bank announced on Friday. In its first statement after the scandal erupted, the central bank said it “will take appropriate supervisory action” but underlined that it had not issued any orders to PNB to assume all liabilities arising from the fraud.

“There have been reports in the media that in the wake of the fraud involving a sum of $1.77 billion, the RBI has directed PNB to meet its commitments under the LOU to other banks. RBI denies having given any such instructions,” the central bank said in a statement.”The fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls. RBI has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action,” it added.