PNB and Rotomac scams to offset gains from bank recapitalisation

Additional funds may required for Union Bank and Allahabad Bank

Exposure to recent instances of fraud at Punjab National Bank (PNB) and Rotomac may offset gains from the government’s capital infusion programme for Union Bank of India and Allahabad Bank. The two public sector banks (PSBs) are reeling from high non-performing assets (NPAs).

Union Bank has a total exposure of Rs 24 billion in the two fraud cases, while the figure for Allahabad Bank is pegged at Rs 27 billion.

Recapitalisation funds might prove to be insufficient, as the exposure will consume over 50 per cent of the funds allotted to Union Bank. For Allahabad Bank, the exposure is about