India State Lender Plunges After Uncovering Fresh $554 Million Fraud
Punjab National Bank paced losses in the Nifty Bank Index after it disclosed another incident of fraud amounting to $554 million.
(Bloomberg) -- State lender Punjab National Bank paced losses in the Nifty Bank Index on Monday after it disclosed another incident of fraud amounting to 38 billion rupees ($553 million), roughly one year after it suffered through the country’s costliest banking scandal.
Shares of the New Delhi-based lender lost 11% in Mumbai, making it the worst performer in the 12-member Nifty Bank Index, which was down 2.8%. The Monday’s drop is the sharpest fall in PNB’s shares in more than a year.
The new case relates to the non-performing assets of insolvent Indian firm Bhushan Power & Steel Ltd., for which provisions of 19.3 billion rupees is already made, PNB said in a filing on Saturday. The lender has reported the fraud to the Reserve Bank of India.
PNB said Bhushan misappropriated bank funds and manipulated account books to raise money from consortium lender banks. A vast majority of the fraud took place at PNB’s Chandigarh branch, and also involved offices in Hong Kong and Dubai. The bank said it expects a “good recovery” from the insolvency case, which is currently before the National Company Law Tribunal.
The announcement is a fresh blow to PNB, which uncovered India’s biggest-ever bank fraud last year. That nearly $2 billion scandal was allegedly perpetrated by jeweler-to-the-stars Nirav Modi, who was arrested by U.K. police at the request of Indian authorities and is embroiled in an extradition process. Modi denies wrongdoing.
To contact the reporters on this story: Iain Marlow in New Delhi at imarlow1@bloomberg.net;Suvashree Ghosh in Mumbai at sghosh186@bloomberg.net
To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Anto Antony, Arijit Ghosh
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