$1.8 Billion Fraud At Punjab and National Bank, Mumbai Branch
Punjab National Bank said it has detected a $1.8 billion fraud at a single branch in Mumbai, the impact of which could extend to other lenders as well. Punjab National Bank has detected some fraudulent transactions in one of its branches in Mumbai "for the benefit of a few select account holders with their apparent connivance," it said in an exchange filing on Wednesday. "Based on these transactions other banks appear to have advanced money to these customers abroad." The fraud is likely to create a challenge for Chief Executive Officer Sunil Mehta, who took charge last May about a year after PNB and 12 other lenders were fined for violating rules on some $1 billion of foreign-exchange deals. Investigative agencies have been informed about the latest fraud transactions, PNB said. "So far there is no clarity on the impact on the lender's bottom line from this," said Ashutosh Kumar Mishra, a Mumbai-based banking analyst at Reliance Securities Ltd. "There is no clarity on whether these transactions are reversed, whether the bank is holding collateral that could back part of these transactions or whether enforcement authorities will be able to recover this amount." The fraudulent transactions are the equivalent of eight times the lender's 2017 net income of about 13.2 billion rupees ($206 million), exchange filings show. PNB shares fell as much as 7.5 percent as of 11:20 a.m. in Mumbai, poised for the steepest drop since October. -PTC News
