Punjab National Bank detects Rs 11344 crore fraud

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Since the Rs 11,300 crore fraud in Punjab National Bank's (PNB) MC Brady House branch in Mumbai broke out on Wednesday, a string of developments has taken place.

On a closing basis, the scrip of PNB closed at Rs 145.80, down by Rs 15.85 or 9.81 per cent from its previous close of Rs 161.65. Its market cap on closing on Thursday stood at Rs 35,365 crore.

It has put the quantum of such transactions at $1,771.69 million (around Rs. 11,515 crore).

The disclosure has sent alarm bells ringing as the $1.77 billion fraud is nearly one-third of its market cap. PNB has capability and capacity to come out of this, Mehta said.

Consequently, shares of Union Bank of India settled down 0.95%, Allahabad Bank ended the day down 2.31% and Axis Bank was quoted down 0.17%.

On Wednesday, PNB said in a regulatory filing it had discovered fraudulent and unauthorised transactions totalling $1.77 billion at the Mumbai branch. "The Finance Ministry has taken proactive steps by asking the lender to report the matter to the CBI and the Enforcement Directorate (ED) so that action can be taken quickly", he said. Anything that happens now will be based on the law and genuineness of underlying transactions. Later, he started the Nirav Modi jewellery brand and has posh clients in the global market.

Indian banks, including PNB, have been stung by a surge in bad loans in the past four years, choking lending growth vital to accelerate the pace of expansion in Asia's third-largest economy.

This is the second incident in ten days that the bank has been allegedly defrauded by the same person.

PNB has found some high amount of fraud and illegal transactions in its Mumbai branch and this all was done to provide the benefit to few account holders with the conspiracy.

Shankar Prasad told a press conference assets worth Rs 1300 crore have been seized and a look-out-notice against Modi has been issued, ANIreported.

According to reports, billionaire jeweller Nirav Modi and companies linked to him managed to fraudulently get PNB guarantees worth Rs 10,000 crore, which they used to obtain loans from other banks and overseas. "The facts disclose commission of cognizable offences of criminal conspiracy, cheating and abuse of official position by the aforesaid accused persons", the FIR states. The duo has been named in the FIR. To which Nirav Modi's jewellery firm said, "why should I pay the margin when I have used the same credit facility in the past without giving any collateral?" There is no directive from RBI in this matter so far, but PNB has said if push comes to shove they will bear the entire liability involved in this case.