Fraud-hit lender posts largest ever Indian bank loss

17 May, 2018, 15:00 | Author: Brenda Erickson
  • Punjab National Bank reports huge loss of Rs. 13417 crore in Q4

Ananthasubramanian was the CMD of Punjab National Bank till May 2017.

"The liabilities on account of LoUs/FLCs, which became due up to March 31, 2018 amounting to Rs 6,586.11 crore have been paid by the bank...", the PNB said in a regulatory filing, while announcing its fourth quarter result.

Gitanjali group owner Mehul Choksi and Allahabad Bank CEO Usha Ananthasubramanian along with 13 others were on Wednesday charged by the CBI for alleged cheating and corruption in the issuance of fraudulent letters of undertakings (LoUs) worth Rs 7,080.86 crore from Punjab National Bank (PNB) in the country's biggest banking scam case.

Looking at the bank's Q4 earnings, financial services company Jeferries said in a report that "the need for a bailout by the government is immediate".

The agency also named PNB Executive Directors K.V. Brahmaji Rao and Sanjiv Sharan, and General Managers Nehal Ahad (who dealt in global operations) and Rajesh Jindal in its chargesheet filed in a special CBI court here. The charge sheet also named main accused Nirav Modi's uncle Mehul Choksi as "wanted".

Punjab National Bank reports huge loss of Rs. 13417 crore in Q4
PNB seen posting huge Q4 loss due to $2 billion fraud, NPAs

Earlier this month, PNB said it was targeting growth of over 10 percent in loans and deposits in 2018/19 and that it had strengthened the process of credit underwriting and upgraded its systems to prevent further frauds.

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 United States bankruptcy court. "After including outstanding amounts under other credit facilities to the above entities, the amount involved now works out to Rs 14,356.84 crore", the bank said in its notes to accounts.

The public sector major on Tuesday had reported a net loss, after closing hours of the stock markets, of Rs 13,417 crore for quarter ended March, against a net profit of Rs 262 crore for the corresponding quarter in 2016-17.

Tighter RBI rules announced in February, which did away with half a dozen loan restructuring schemes, have led to banks reporting a surge in bad loans in the March quarter, and several of them reporting losses.

To ensure proper checks and balances, PNB has gone for a four-way split for loan operations and created a focused off-site centre for monitoring all foreign exchange businesses.

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