PNB reports fraud of Rs 3,688.58 cr in DHFL account; stock slumps 7%

Shares of DHFL, meanwhile, tanked 4.8 per cent in the intra-day trade to hit a day's low of Rs 14.9 apiece on the BSE

Shares of state-owned Punjab National Bank slumped up to 6.7 per cent to Rs 34.6 on the BSE on Friday after the bank said it has reported loan extended to Dewan Housing Finance Ltd (DHFL), worth Rs 3,688.58 crore, as fraud.

"The bank is reporting Borrowal Fraud of Rs 3,688.58 crore in NPA account of Dewan Housing Finance Ltd. (DHFL) at large corporate branch at Mumbai, Zonal Office," the bank said in a regulatory filing.

The bank, however, had already made provisions for the NPA account amounting to Rs 1,246.58 crore, as per prescribed prudential norms, it added. READ FILING HERE

During the March quarter, PNB's net loss narrowed down to Rs 697.20 crore, compared with Rs 4,749.64 crore loss in the corresponding quarter last year. It made provisions of Rs 4,901.31 crore for bad loans during the quarter under review, down 51.33 per cent from the year-ago period.

"Despite higher margins and other income, PNB once again reported a loss, mainly driven by higher NPA provisions due to improved specific PCR and higher write-offs. PNB’s SMA 2 book now declined to Rs 9600 crore (1.9% of loans vs. 3.2% in Q3), while total SMA (0-2) was Rs 51,800b crore  (13% of loans). Barring 5% provision on loans under the standstill benefit, the bank has not made any Covid-19 contingent provision, which is disappointing. The merged bank has GNPA of 13.8%, NNPA of 5.5% and PCR of 60%," analysts at Emkay Global Financial Services had said in a Q4 result review note. They have 'sell' rating on the stock with a target price of Rs 29. 

At 9:50 am, the stock of the bank was trading 3.6 per cent lower at Rs 35.75 per share on the BSE, as against 70 points, or 0.19 per cent, decline in the benchmark S&P BSE Sensex. A combined 32.64 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report. On the other hand, shares of DHFL tanked 4.8 per cent in the intra-day trade to hit a day's low of Rs 14.9 apiece. It was trading 3 per cent lower at 9:50 am on the BSE. 

In November last year, the Reserve Bank had sent the troubled mortgage lender DHFL for bankruptcy proceedings, making it the first financial services player to go to the NCLT for a possible debt resolution. DHFL came in the eye of the storm after a report suggested that the company, through layers of shell companies, allegedly siphoned off Rs 31,000 crore out of total bank loans of Rs 97,000 crore.