Fraud-hit Punjab National Bank's capital adequacy has fallen short of the regulatory requirement of Reserve Bank of India due to unprecedented loss in the fourth quarter of 2017-18. At the end of March, 2018, total capital ratio as per the Basel- III requirement declined to 9.20 per cent as against 11.66 per cent at the end of March 2017. On consolidated basis, it slipped to 9.82 per cent as against 11.98 per cent during the same period. As per the RBI's norms, the total capital adequacy, including counter-cyclical buffer should be upwards of 11.5 per cent. So to that extent, there is shortfall as far as capital adequacy of PNB is concerned as on the March 31, 2018. ".the capital position of the bank as at March 31, 2018 being below the regulatory requirement (including countercyclical buffer) of Reserve Bank of India, Hong Kong Monetary Authority (HKMA) is enhancing the Supervisory arrangements on our Hong Kong branch," PNB said in a regulatory filing today. The erosion of capital can be primarily be attributed to over Rs 14,000 crore farud wherein billionaire jeweller Nirav Modi and associates had allegedly acquired fraudulent letters of undertaking (LoUs) from one of the branches of PNB for overseas credit. The scam was perpetrated by way of fraudulent LoUs generated in the name of Punjab National Bank. As a result of the country's biggest fraud, PNB last month posted its largest ever quarterly loss of Rs 13,416.91 crore for January-March period, mainly on account of high provisioning for Nirav Modi fraud and bad loans.