After Q4 results, PNB's NPAs are now more than its net worth

Punjab National Bank | PNB, the second largest of the 17 public sector banks, has written off Rs 44,565.59 crore as technical write-offs in a four-year period starting FY17. As against these write-offs, the bank managed to recover just Rs 12,027.97 crore, data obtained by Velankar under the Right to Information (RTI) Act revealed. (Image: PTI)

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26 Aug, 2025 12:21

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The country’s second-largest state-owned lender Punjab National Bank on Tuesday achieved a dubious distinction. It became the first major bank in the country whose net worth fell below the amount of non-performing loans on its books.

As on March 31, the bank had net non-performing loans totaling over Rs 48,000 crore on its books, against a net worth of around Rs 41,000 crore.

To be sure, PNB is not the first bank in the country to have witnessed this kind of misfortune. Smaller public sector banks like Oriental Bank of Commerce, Dena Bank, Union Bank of India and UCO Bank, among others, have already crossed that bridge.

But the fact that a lender the size of PNB, which has loans of around Rs 4.33 lakh crore on its books, has deteriorated to such an extent that it has more bad loans than it is worth is a point of concern.

Moreover, the bank’s asset quality has worsened quite a bit over the past couple of years, forcing it to provide more and more for bad and doubtful loans. Most of the deterioration in asset quality was due to the Reserve Bank of India’s directive in 2016, which mandated banks to report all their bad and doubtful loans.

Also, the Delhi-based bank recently reported a bank fraud of over Rs 13,000 crore that had been taking place under its roof since 2011. PNB said it had detected "fraudulent and unauthorised transactions" at one of its branches in Mumbai and that it had filed a complaint with the Central Bureau of Investigation.

According to the complaint, a set of partnership firms -- Diamond R US, Solar Exports and Stellar Diamonds -- approached the lender in January with a set of import documents and requested buyer's credit in lieu of them to make payments overseas. Diamantaire Nirav Modi, his brother Nishal Modi, his wife Ami Nirav Modi, and uncle Mehul Chinubhai Chokshi were the registered partners of these firms.

Ever since, the CBI has been investigating all parties involved actively and has filed a charge sheet pertaining to the case.