PNB fraud to impact other banks, increase their bad loans provisions

Some banks have direct exposure to Nirav Modi's companies

The fraudulent transactions at Punjab National Bank are likely to hit the books of other lenders as well. Doubts about similar fraudulent practices at other banks were gathering steam, analysts said. 

The impact of the PNB fraud will extend to counter parties (lenders), hit their asset qualities and increase provisions for bad loans.  

Most bankers said the entire liability would fall on PNB since the letters of understanding (LoUs) availed by Nirav Modi’s companies were issued on behalf of the bank’s Mumbai branch.

Some banks, however, have direct exposure to Nirav Modi’s companies, though they have been standard assets so