Punjab National Bank (PNB) share price tanked 6.7% on Friday morning after the public sector lender informed that it is reporting another loan fraud to the Reserve Bank of India.
Punjab National Bank (PNB) share price tanked 6.7% on Friday morning after the public sector lender informed that it is reporting another loan fraud to the Reserve Bank of India. PNB said that the borrowal fraud of Rs 3,688 crore related to the NPA account of M/s Dewan Housing Finance Ltd. (DHFL). Punjab National Bank is infamous for the loan fraud by diamantaire Nirav Modi in February pf 108, where the bank found itself in the middle of Rs 14,000 crore fraud. DHFL, a housing finance company, is facing bankruptcy proceedings. PNB shares were trading at Rs 34.6 per share.
The lender informed the stock exchanges that fraud of Rs.3,688.58 crore is being reported by PNB to RBI in the accounts of the DHFL. “The Bank has already made provisions amounting to Rs.1,246.58 Crore, as per prescribed prudential norms,” the regulatory filing said. In the March quarter, PNB had reported a net loss of Rs 700 crore with provisions totaling to over Rs 4,900 crore. Lenders across the board made higher provisions in the March quarter to ward-off any spike in NPAs after the loan-moratorium period ends.
PNB, India’s second-largest public sector lender has been mired with loan frauds in recent years. After seeing Nirav Modi abscond leaving the bank embarrassed with the now over Rs 14,000 crore dent in its books, the bank reported a Rs 3,800 crore loan to Bhushan Power and steel as fraudulent. The newly surfaced loan fraud with DHFL will be the bank’s fourth in three years. DHFL has been under the scanner after the Reserve Bank of India took over from its board last year. RBI had superseded the promoters of DHFL after governance issues arose at the non-bank lender.
In the March quarter, PNB reported a loss but gross fresh slippages remained elevated at, however, higher write-offs led to lower NPAs on-quarter. 30% of the customers of the struggling lender have opted for a moratorium. PNB, along with reporting the DHFL loan fraud also informed the bourses that it has received Board approval for raising Rs 10,000 crore capital through share sale and Tier-II bonds.