Fraudulent transactions worth Rs 11,500 crore detected from PNB’s Mumbai branch

The state-run Punjab National Bank (PNB) on Wednesday said it had detected “fraudulent and unauthorised” transactions worth about $1.8 billion or roughly Rs. 11,500 crore at one of its branches in Mumbai.

PNB is the country’s second-biggest lender and fourth-biggest overall by assets.

The bank, in a regulatory filing, said the transactions were “for the benefit of a few select account holders with their apparent connivance” and that “based on these transactions other banks appear to have advanced money to these customers abroad.”

The bank did not explicitly name the people involved but said it had reported the deals to law enforcement agencies and would evaluate later whether it faces any liability arising out of the transactions.

“In the bank these transactions are contingent in nature and liability arising out of these on the bank shall be decided based on the law and genuineness of underlying transactions,” PNB said, without giving further details.

According to exchange filings, the fraudulent transactions are approximately eight times PNB’s 2017 net income of about 13.2 billion rupees ($206 million).

The lender, incidentally, is already dealing with other allegations of fraudulent transactions.

Last week, law agencies said they had launched an investigation into billionaire jeweller Nirav Modi, one of the country’s richest men, over accusations that he and others defrauded PNB of $44 million.

It was not immediately known if the latest disclosure on fraudulent transactions was related to or separate from the previous incident.

The incident is likely to create further challenges 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.

According to Bloomberg, PNB shares fell as much as 7.5 percent as of 11:20 am in Mumbai, the steepest drop since October.

With agency inputs