The stock fell 30% in five sessions following the ~Rs11,600cr fraud at one its Mumbai branches.
Fitch Ratings has placed PNB Viability Rating of 'BB' on Rating Watch Negative (RWN), following the large fraud, as per media reports.
The stock is currently trading at Rs112.35, down by Rs4.05 or 3.48% from its previous closing of Rs116.4 on the BSE.
The scrip opened at Rs113.5 and has touched a high and low of Rs114.2 and Rs111 respectively.
Punjab National Bank (PNB) made the announcement on February 14, that it detected some fraudulent and unauthorized 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. In the bank these transactions are contingent in nature and liability arising out of these on the bank shall be decided based on the law and genuineness of underlying transactions. The quantum of such transactions is $1771.69 million (approximately). The matter is already referred to law enforcement agencies to examine and book the culprits as per law of the land. The bank said it is committed to clean and transparent banking.
PNB clarified on January 16, the partnership firm of Nirav Modi group approached PNB branch at Brady House, Mumbai and presented a set of import documents with a request to allow buyers credit for making payment to the overseas suppliers. Since there was no sanctioned limit in the name of the above firms, the branch officials requested the firms to furnish at least 100% cash margin for issuing Letter of Undertaking (LOU) for raising buyers credit. On denial, the firms contested that they have been availing such transactions since past several years.
On scrutiny, it was observed that earlier issuance of letter of undertakings (LOU) had been made by the branch officials through SWIFT (The Society for Worldwide Interbank Financial Telecommunication) without obtaining approval of the competent authority, necessary applications from importer, documents of import, legal documentation with bank and also without making entries in banks trade finance module of CBS system.
A series of meetings were held with representatives of Nirav Modi group and Gitanjali group at Delhi and Mumbai to impress upon them to pay the amount. They were also directed to provide all necessary documents as per law to ensure that the imports are bonafide trade transactions.
Upon confirming the first maturity of LOUs liabilities on January 25, 2018, as fraudulently credit against the bank, an FMR-1 (fraud report format of RBI) was submitted to the Reserve Bank of India (RBI) on 29 January 2018 amounting to $44.22 million, equivalent to Rs280.70cr (related to 3 group firms of Nirav Modi).
On January 29, a criminal complaint about registration of FIR against accused persons including the maker & checker employees of the bank for an offense of cheating of fraud was filed with Joint Director (Policy), Central Bureau of Investigation (CBI) and same stands registered on 31 January 2018.
On February 12, based on investigation report, total fraud of Rs 11394.02 crore in case of unauthorized issuance of letters of undertakings, foreign letter of credits and inland letter of guarantees in the group accounts of Nirav Modi Group and Gitanjali Group and in the account of Chandra Paper & Allied Products was reported to RBI. On 13 February 2018, an FIR was filed with CBI against above 2 groups and Chandra Paper & Allied Products.
On February 13, PNB filed a complaint with the Enforcement Directorate.
Government of India held 57.03% stake in PNB as per the shareholding pattern as on 31 December 2017.
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