PNB loses Rs 8,000 crore m-cap in 2 days, six times its annual profit

NEW DELHI: Stung by way of an enormous Rs 11,400 crore fraud, state-run Punjab National Bank (PNB) has misplaced over Rs 8,00zero crore of market valuation in two days -- an amount an identical to over six-times its full-year benefit.

PNB on Thursday extended its fall for the second directly consultation and ended the day 12 in step with cent lower at Rs 128.35 on BSE. The stock had fallen 10 in step with cent yesterday, after the lender said it had detected a Rs 11,400 crore ($1.77 billion) fraud at a Mumbai branch.

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Following the slump within the counter over the last two days, the market capitalisation of the corporate has plunged a whopping Rs 8,076.59 crore to Rs 31,132.41 crore. This is greater than 6-times of the corporate's full-year net benefit of Rs 1,324 crore recorded in FY 2016-17.

The quantum of fraud itself is greater than 8-times the financial institution's annual benefit.

The state-owned financial institution said it had detected a $1.77 billion fraud through which billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking (LoUs) from one of its branches for in another country credit from other Indian lenders.

PNB has suspended 10 officials over the rip-off and referred the matter to CBI for investigation.

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Meanwhile, shares of PNB Housing Finance settled for the day at Rs 1199.00, down four.30 in step with cent at the BSE.

While PNB didn't identify other lenders, Union Bank of India, Allahabad Bank and Axis Bank are said to have offered credit in line with LoUs issued by way of PNB.

An LoU is a letter of convenience issued by way of one financial institution to branches of other banks, in line with which overseas branches be offering credit to buyers.

Consequently, shares of Union Bank of India settled down zero.95 in step with cent, Allahabad Bank ended the day down 2.31 in step with cent and Axis Bank was quoted down zero.17 in step with cent.

This might be the largest banking fraud in India as its quantum was bigger than an estimated Rs 9,00zero crore rip-off at erstwhile Satyam Computers.
PNB loses Rs 8,000 crore m-cap in 2 days, six times its annual profit PNB loses Rs 8,000 crore m-cap in 2 days, six times its annual profit Reviewed by kailash soni on February 15, 2018 Rating: 5
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