PNB Slumps 6% After Detection Of Fraudulent Transactions Worth $1.8 Billion

PNB did not mention the impact the fraud may have on its financials.

Shares of Punjab National Bank (PNB) fell as much as 6 per cent to Rs. 152 after the public sector lender reported fraudulent transactions around $1.8 billion in one of its branches in Mumbai. PNB reported this in an announcement to stock exchange BSE. PNB has detected some fraudulent and unauthorised transactions (messages) in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance, the bank said in a regulatory filing.

“Based on these transactions other banks appear to have advanced money to these customers abroad,” said Punjab National Bank.

PNB did not mention the impact the fraud may have on its financials. “These transactions are contingent in nature and liability arising out of these on the Bank shall be decided based on the law and genuineness of underlying transactions. The quantum of such transactions is $1771.69 million (approx). The matter is already referred to law enforcement agencies to examine and book the culprits as per law of the land,” PNB noted.

Broadly, the shares of public sector banks were under pressure after Reserve Bank of India (RBI) tightened rules around bank loan defaults, seeking to push more large loan defaulters towards bankruptcy courts and abolishing half a dozen existing loan-restructuring mechanisms. This could lead to higher provisioning, say some analysts, hurting the finances of banks.

Among individual stocks, SBI shares fell close to 2 per cent while Bank of Baroda was down nearly 1 per cent in morning trade. PNB shares were down nearly 5.6 per cent as compared to a flat Mumbai market.