PNB Share Price Slumps To Double Digits As Fraud Gets Bigger

Punjab National Bank (PNB) shares came under strong selling pressure today after the state-run bank said that the fraudulent transactions related to the recent fraud revealed by the bank could be Rs 1,300 crore more than the current estimate. "...We have to inform that quantum of reported unauthorised transactions can increase by USD 204.25 million (approximately)," PNB said in a filing to the Bombay Stock Exchange (BSE). At the current exchange rate, the amount comes to around Rs 1,323 crore. PNB shares fell as much as 14 per cent at day's low on the BSE, falling below the Rs 100 mark at Rs 96.10.

Billionaire jeweller Nirav Modi and his associates are being investigated by multiple probe agencies, following a complaint by the Punjab National Bank (PNB), that they allegedly cheated the bank to the tune of Rs 11,400 crore, with the purported involvement of a few employees of the bank.

PNB had first disclosed the fraud on February 14th, estimating "fraudulent and unauthorised transactions" at $1.77 billion (about Rs 11,400 crore). After the latest disclosure, the quantum of unauthorised transactions related to the fraud goes up to Rs 12,700 crore.

Since February 14, when the fraud was first disclosed by the bank, PNB shares have lost nearly 40 per cent of their value.

The scam was perpetrated by way of fraudulent Letters of Undertaking (LoUs) generated in the name of Punjab National Bank, the bank said.

PNB earlier said that it was putting in place "better checks and balances", as investigators widened the probe into the country's biggest-ever bank scam. Meanwhile, the Reserve Bank of India, in a statement late on Friday, said it "has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action".

Comments

The PNB fraud comes a time when the Indian banking sector is reeling under the weight of bad loans worth nearly Rs 10 lakh crore. State-run banks account for the bulk of the bad loans in the banking sector. PNB shares ended 12 per cent lower on BSE at Rs 98.35.


(With agency inputs)