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'$1.8 bn fraud in PNB may impact other banks'

IANS  |  Chennai 

The $1.8 billion fraud detected at one of the branches of (PNB) may have an impact on couple of other banks, said a

Jaikishan J Parmar, Research Analyst, told IANS that it is not clear whether PNB had made any provision in its books for towards this fraud.

"Some other banks in addition to PNB might be impacted as they too have given loans to these clients abroad," he added.

Banking sector union sources meanwhile told IANS that 22 PNB employees have been placed under suspension including an in connection with the massive fraud in its Brady House Branch in

The (CBI) has booked Nirav Modi, his brother, wife and an enterprise companion for allegedly cheating PNB and other banks of around Rs 280 crore.

As per the FIR registered by CBI, the accused have committed fraud on PNB, Allahabad and Axis to the tune of Rs 280.70 crore.

According to PNB complaint, some fraudulent issuance of Letters of Undertakings (LoU) were detected at its Brady House branch in

As per the complaint, a set of partnership firms presented import documents and asked for credit to pay their suppliers. The branch officials had asked for 100 per cent cash margin for issuance of LoU.

However the partnership firms had argued that they had been availing such a facility in the past, but the branch officials did not find any record in support of their argument.

Banking sectoral analysts are not clear whether PNB has provided any amount towards this fraud in its third quarter results.

The bank had provided a sum of Rs 4,466.68 crore towards non-performing loans and other contingencies for the quarter ended December 31, 2017.

According to Parmar, the new development dampens the sentiments around PNB which had seen a marginal improvement in its asset quality in this quarter.

The stock tanked nearly 10 per cent on Wednesday considering the magnitude of the scam which is nearly one-third the market capitalisation of PNB, he said.

On the on Wednesday, PNB's shares closed at Rs 145.80, down from Rs 161.65, the closing price on Tuesday.

Meanwhile a banking industry source told IANS the alleged fraud has been going on in PNB for a long time and the matter came to light when a new was posted and he started to look into the past transactions.

The source added that the transactions were not entered in the bank's systems to evade detection.

"The fraud quantum is equivalent to five years profit of It is clear failure of the system. Earlier management said computerisation would avoid frauds but in this case, the transactions were not recorded in the computer systems at all," C.H.Venkatachalam, General Secretary, All (AIBEA) told IANS.



(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 14 2018. 21:42 IST