PNB extends slide to 12% as bank may need to pay full fraud amount

Punjab National Bank (PNB) continued to feel the aftershocks of the news of a Rs 11,300 crore fraud at its Mumbai Branch as the scrip tumbled for the second straight session on Thursday.

The size of the scam is equivalent to 31 per cent of the bank’s market value.

The scrip closed 11.97 per cent down at Rs 128.35 on BSE.


“The case assumes significance because based on these transactions, other banks had advanced loans to these clients abroad,” told Jaikishan J Parmar, analyst, Angel Broking, to ET. “PNB has also involved the Enforcement Directorate to track the audit trail of the money. This dampens sentiment around PNB, which had seen a marginal improvement in its asset quality in this quarter.”

While advising investors in an interaction with ETNow, Abhimanyu Sofat, VP-Research, IIFL, said, “Considering the scale of the fraud, it would make sense to stay away from the PSU stocks. Look for more corrections and then only enter stocks which have decent capital adequacy. Plus, clearly with these kinds of numbers coming up, I do not think so that any PSU will have money for growth and most of the money will go into provisioning of these NPAs only.”