Shares of the scam-hit, NPA-laden and the under probe Punjab National Bank slipped to double digits on Tuesday hitting a 20-month low as the carnage continued with the fraud amount rising to Rs 12,700 crore.
Shares of the scam-hit, NPA-laden and the under probe Punjab National Bank slipped to double digits on Tuesday hitting a 20-month low as the carnage continued with the fraud amount rising to Rs 12,700 crore. PNB’s Rs 12,700 crore involving the diamond merchant Nirav Modi and Mehul Choksi has been India’s biggest banking scandal so far. India’s second-largest PSU lender Punjab National Bank has been badly hit by the fraud, as the share prices of the state-run lender had been broadly declining for the last 10 days, since the day when PNB had informed that it had detected “unauthorised and fraudulent transactions” at the branch in Mumbai.
In the latest addition to the giant scandal, PNB on Monday night had said that the fraud amount may scale up by $204. 25 million or Rs 1,323.34 crore (as per rupee’s closing on 26 February 2018). With the addition of Rs 1,323.34 crore, the total fraud stands at Rs 12,717 crore as against Rs 11,394 crore. In the late-night filing to the stock exchanges, PNB said that the quantum of “reported unauthorized transactions” can increase by $204 million. This addition to the fraud amount came in the continuation of PNB saying that the bank has detected “unauthorised and fraudulent transactions” in the Brady House branch of Mumbai amounting to $1.77 billion or Rs 11,394 crore.
After the fraud amount of PNB widened to Rs 12,700 crore, Financial Services Secretary Rajiv Kumar on Tuesday said that all public sector banks (PSBs) have been given a 15-day deadline to take pre-emptive action and identify gaps/weakness to gear up for rising operational and technical risks. “15 days deadline for PSBs to take pre-emptive action and identify gaps/weakness to gear up for rising Ops and Tech risks; To learn from best practices and pinpoint strategies including tech solutions; clear accountability of senior functionaries,” Rajiv Kumar said in a tweet.
Following the blow, the stock of PNB crashed to 14.24% to a 20-month low of Rs 96.05 on NSE while the stock plunged 14.12% to Rs 96.1 on BSE. A massive trading volume has been witnessed on the counters of PNB, as at 2:55 pm, more than 19 crore shares exchanged hands on both NSE and BSE with about 18 crore shares on NSE alone. On 24 June 2016, PNB shares were at a low of Rs 93.55 on NSE. Shares of Punjab National Bank had been the top losers among all the PSU stocks. The share prices of PNB had been sliding down since 14 February 2018. Taking today’s plunge into account, PNB shares have slumped over 40% in the last 10-day period.
With such a huge decline in the share prices, PNB has lost nearly Rs 16,000 crore in the market capitalisation. As per the fresh 20-month low price of Rs 96.1, PNB commands a market capitalisation of Rs 23,321.7 crore down by Rs 15,907.78 crore. As per the closing price on 12 February 2018, PNB held a market capitalisation of Rs 39,229.47 crore.
The billionaire jeweller Nirav Modi is accused of obtaining buyer’s credit from several Indian lenders such as Allahabad Bank, Axis Bank and UCO Bank on the basis of fake LOU (Letters of Undertaking) issued by Punjab National Bank. Nirav Modi’s uncle and the promoter of Gitanjali Gems, Mehul Choksi is also under the scanner in the scam.