Punjab National Bank Wednesday said the bank has detected fraud transactions totaling over Rs 11,300 crore at its Mumbai branch. This led to the share price tanking 9.8 percent.
The fraudulent transaction amount is close to 1/3rd of its total market capitalisation of Rs 36,000 crore, or 2.55 percent of total loan book of Rs 4.5 lakh crore (as of December 2017). It is also 8 times of bank's FY17 net profit of Rs 1,324 crore.
With the sharp fall, investors lost Rs 3,844 crore of wealth on single day.
"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," the third largest public sector lender said in its BSE filing.
It further said 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 transactions is USD 1,771.69 million (approximately).
"The matter was already referred to law enforcement agencies to examine and book the culprits as per law of the land. The bank is committed to clean and transparent banking," PNB said.
Sources told PTI that the CBI has received two complaints from PNB against billionaire jewellery designer Nirav Modi and a jewellery company about fraudulent transactions.
Modi is already facing a CBI probe on a complaint from the Punjab National Bank, sources said.
Meanwhile, the bank, on February 6, reported lower than expected earnings for December quarter but asset quality improved sequentially.
Profit growth of 11 percent at Rs 230.11 crore and net interest income growth of 7 percent at Rs 3,989 crore year-on-year were below CNBC-TV18 poll of Rs 558.1 crore and Rs 4,122.9 crore, respectively.
The bank showed a good improvement on asset quality front as gross non-performing assets were lower at 12.11 percent compared to 13.31 percent in previous quarter. Net NPAs were also lower at 7.55 percent from 8.44 percent on sequential basis.
But provisions for bad loans remained at elevated levels, surging 80 percent quarter-on-quarter and 74 percent year-on-year to Rs 4,466.7 crore in Q3.
Provision coverage ratio at 60.78 percent in Q3 improved from 59.20 percent in previous quarter.
The stock rallied nearly 7 percent in last one year while PSU Bank gained 3 percent and Nifty Bank rallied 27 percent.
(1 US dollar - 64.15)