NPA rules and Rs 110-bn fraud can put one-fourth of PNB's net worth at risk

The fraudulent transactions, which can be as much as $1.77 bn, along with new NPA rules can lead to a surge in provisioning

Shares of Punjab National Bank (PNB) fell almost 10 per cent on Wednesday due to twin negative news. While the new framework on non-performing assets (NPA) resolution could mean higher loan provisioning for the banking sector, PNB said it had detected fraudulent and unauthorised transactions worth $1,771.69 million (Rs 113.6 billion) at one of its branches in Mumbai. 

The bank’s profit and overall asset quality are expected to take a hit even if the fraud alone is considered. Some analysts say if the entire amount attributed to the fraud becomes NPA, as much as 25 per cent of the bank’s