The stock of Punjab National Bank has lost half a billion dollars after a loan fraud of the same amount came to light
- Skeletons keep tumbling out of the Punjab National Bank's closet and the stock is down nearly 10% on Monday.
- One of India's marquee government banks, PNB, revealed that it had lost another half a billion dollars to a loan fraud, this time, at
Bhushan Power and Steel.
- Bhushan Power and Steel is awaiting resolution at the National Company Law Tribunal.
Bhushan Power and Steel is awaiting resolution at the National Company Law Tribunal.
PNB informed the stock exchanges on Saturday that it had written to RBI sharing its findings from a forensic report-- nearly ₹3,805.15 crore had been swindled away by the now-insolvent Bhushan Power and Steel Ltd (BPSL). The company has already set aside half of the amount from its profits to cover for the loss, if any, as per the prescribed prudential norms.
However, the share price has lost nearly the entire amount in market capitalisation as investors rued the lack of adequate checks and balances.
The company had "misappropriated funds and manipulated books of accounts to raise funds from consortium lender banks", PNB said. In February 2018, the ₹13,500-crore scam involving diamantaires Nirav Modi and Mehul Choksi had come to light at the PNB.
It is one of the first 12 accounts identified by the RBI for insolvency proceedings. The Central Bureau of Investigation (CBI), India's premier investigative agency, is already probing Bhushan Power and Steel for alleged lapses in governance.
"At present, the case is in advance stage at the National Company Law Tribunal (NCLT) and the bank expects good recovery in the account," PNB said.
With inputs from IANS
Indian banks will now have more cash to lend for more reasons than one