Published: Thu, May 17, 2018
People | By Neil Grant

Nirav Modi fraud costs PNB Rs 14357 crore

Nirav Modi fraud costs PNB Rs 14357 crore

In the fourth quarter, the bank's gross domestic business grew 7.8 per cent on annual basis over the corresponding period past year to Rs 10.31 lakh crore, PNB said in a statement.

The stock tanked to a fresh 52-week low of Rs 74.30 on BSE and is now at Rs 75.50, down 12.2% from its previous close. The charge sheet alleged that Gokulnath Shetty, a deputy manager in PNB, arrested by the CBI, received Rs 1 crore from the companies of Choksi to issue LoUs to his companies, they said. Two of its Executive Directors have also been divested of their functional powers.

The Delhi-based lender's earnings will be under pressure as it will have to make provisions for the scam-related payouts to other banks.

Punjab National Bank said on Tuesday that its total liability works out to Rs 14,356.84 crore on account of the fraud allegedly carried out by jewellery designer Nirav Modi and associates.

In connection with the pleas filed on the Gitanjali Gems in the court, the ED said, "The Company cleverly veils any reference to Mehul Choksi, who left India in the twilight of the scam coming to the notice of the law enforcement agencies".

Of this, the bank made payments of Rs6,500 crore to seven banks honouring these LoUs in the March quarter, that is expected to reflect in the quarterly results. At that time, Ms Ananthasubramian sent a report saying there was no such fraud taking place at PNB, leading to suspicion against her.

The bank had posted Rs 261.90 crore profit during the same phase previous year.

Incidentally, BDO India LLP, the firm engaged by PNB to conduct a forensic investigation into the fraud committed by Modi and his companies, has also shared its findings with the U.S. bankruptcy court. The bank has witnessed deterioration in gross net performing assets (NPAs) or bad loans, which rose to 18.38 per cent of gross advances at the end of March this year, as against 12.53 per cent a year ago.

The second largest state-owned bank came up with a loss figure of Rs 13,416.91 crore, biggest quantum of loss suffered by any banking entity for a quarter in the country.

The m-cap of PNB Housing Finance stood at Rs 21,265.20 crore on May 16 compared with PNB's Rs 20,856.10 crore.

"PNB may also be restricted to conduct normal business".

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