Shares of almost all of the PSU slid into negative territory with the stock of SBI falling about 2.5% after the Reserve Bank of India provided an all-new new diktat to tackle the NPAs. The stock of Punjab National Bank extended losses after falling over 6% on fraud transactions news.
Shares of almost all of the PSU (public sector undertaking) slid into negative territory with the stock of SBI falling over 2% after the Reserve Bank of India provided an all-new new diktat to tackle the NPAs (non-performing assets). Shares of Punjab National Bank was one of the top losers among public sector banks after the state-run bank said it has detected fraud transactions worth $1.77 billion in one of the branches in Mumbai. The stock of Bank of India also tumbled in the morning trades facing the first third-quarter earnings reaction. Bank of India stock declined the most after the lender reported a net loss of Rs 2,341.23 crore in the October-December period of the financial year 2017-2018. The bank said it has to make up for under-reporting of bad loans in previous fiscal worth Rs 14,057 crore and losses were also observed in the treasury business segment.
Earlier this week on Monday evening, the Reserve Bank of India (RBI) announced a complete overhaul of the stressed asset resolution framework by immediately withdrawing existing schemes and asking lenders to resolve defaults within 180 days. Further, the central bank notified that starting 23 February, all banks will identify the defaults on a weekly basis and should make a disclosure every Friday to the RBI credit registry. The new guidelines have specified framework for early identification and reporting of stressed assets. In a 20-page notification issued on Monday, the RBI said that it is substituting the existing guidelines with a “harmonised and simplified generic framework” for asset resolution in view of the enactment of the Insolvency and Bankruptcy Code (IBC).
The stock of the heavyweight banker State Bank of India dived about 2.5% to the day’s low of Rs 280.5 on NSE. Shares of Punjab National Bank and Bank of India were the top two losers among the Nifty PSU Bank index tumbling up to 7%. The stock of Punjab National Bank lost as much as 7.42% to the day’s low of Rs 149.65; Bank of India fell 6.39% to the day’s low of Rs 135.6. Other shares which also witnessed a plunge include, Oriental Bank of Commerce down 4.3%; IDBI Bank down 4.22%; Canara Bank down 4.03%; Allahabad Bank, Union Bank of India, Andhra Bank, Syndicate Bank, Indian Bank and Bank of Baroda plummeted 1-4%. Following the huge slide in each of the component, the benchmark Nifty PSU Bank index dropped 3.14% to 3,363.9.
In a major blow today, Punjab National Bank said that it has detected some fraud transactions in Mumbai branch, following which the stock of PNB tumbled heavily in the morning trades. “The Bank has 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,” Punjab National Bank said in an exchange filing. The quantum of such transactions is $1,771.69 million (approx), PNB added.