Punjab National Bank fell 8% to Rs 115.60 at 14:08 IST on BSE, extending recent losses triggered by the bank detecting a $1771.69 million fraud at a single branch in Mumbai.
Punjab National Bank (PNB) made the announcement before trading hours on 14 February 2018. Shares of PNB fell 9.81% to settle at Rs 145.80 on 14 February 2018. The stock has fallen 28.49% in four trading sessions from its close of Rs 161.65 on 12 February 2018. The domestic stock market was shut on 13 February 2018, on account of Mahashivratri.Meanwhile, the S&P BSE Sensex was down 355.28 points, or 1.04% to 33,655.48.
On the BSE, 77.33 lakh shares were traded in the counter so far compared with average daily volumes of 19.32 lakh shares in the past one quarter. The stock had hit a high of Rs 123.40 so far during the day. The stock had hit a low of Rs 113.60 so far during the day, which is also a 52-week low for the counter. The stock hit a 52-week high of Rs 231.60 on 26 October 2017.
The stock had underperformed the market over the past 30 days till 16 February 2018, falling 26.35% compared with 3.54% fall in the Sensex. The scrip had also underperformed the market in past one quarter, falling 34.11% as against Sensex's 2% rise. The scrip had also underperformed the market in past one year, falling 10.38% as against Sensex's 19.47% rise.
The large-cap bank has equity capital of Rs 485.12 crore. Face value per share is Rs 2.
PNB announced before trading hours on 14 February 2018, that it 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. Based on these transactions, other banks appear to have advanced money to these customers abroad. In the bank 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 (approximately). The matter is already referred to law enforcement agencies to examine and book the culprits as per law of the land. The bank said it is committed to clean and transparent banking.
PNB clarified after market hours on 15 February 2018, that on 16 January 2018, the partnership firm of Nirav Modi group approached PNB branch at Brady House, Mumbai and presented a set of import documents with a request to allow buyers' credit for making payment to the overseas suppliers. Since there was no sanctioned limit in the name of the above firms, the branch officials requested the firms to furnish at least 100% cash margin for issuing Letter of Undertaking (LOU) for raising buyer's credit. On denial, the firms contested that they have been availing such transactions since past several years.
On scrutiny, it was observed that earlier issuance of letter of undertakings (LOU) had been made by the branch officials through SWIFT (The Society for Worldwide Interbank Financial Telecommunication) without obtaining approval of the competent authority, necessary applications from importer, documents of import, legal documentation with bank and also without making entries in bank's trade finance module of CBS system.
A series of meetings were held with representatives of Nirav Modi group and Gitanjali group at Delhi and Mumbai to impress upon them to pay the amount. They were also directed to provide all necessary documents as per law to ensure that the imports are bonafide trade transactions.
Upon confirming the first maturity of LOUs liabilities on 25 January 2018 as fraudulently credit against the bank, an FMR-1 (fraud report format of RBI) was submitted to the Reserve Bank of India (RBI) on 29 January 2018 amounting to $44.22 million, equivalent to Rs 280.70 crore (related to 3 group firms of Nirav Modi).
On 29 January 2018, a criminal complaint for registration of FIR against accused persons including the maker & checker employees of the bank for offence of cheating of fraud was filed with Joint Director (Policy), Central Bureau of Investigation (CBI) and same stands registered on 31 January 2018.
On 12 February 2018, based on investigation report, total fraud of Rs 11394.02 crore in case of unauthorized issuance of letters of undertakings, foreign letter of credits and inland letter of guarantees in the group accounts of Nirav Modi Group and Gitanjali Group and in the account of Chandri Paper & Allied Products was reported to RBI. On 13 February 2018, an FIR was filed with CBI against above 2 groups and Chandri Paper & Allied Products. On 13 February 2018, PNB filed a complaint to the Enforcement Directorate.
PNB said its liability is contingent only. The liability shall be decided based on the law of land.
Punjab National Bank's net profit rose 11.1% to Rs 230.11 crore on 8% increase in total income to Rs 15257.50 crore in Q3 December 2017 over Q3 December 2016.
Government of India held 57.03% stake in PNB as per the shareholding pattern as on 31 December 2017.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
