PNB extends fall post Rs 114-bn fraud detection; Gitanjali hits 52-week low

Punjab National Bank (PNB) has dipped 9% to Rs 133 in early morning trade on Thursday, extending its previous day’s 10% decline on BSE, after the state-owned bank said on Wednesday it had been defrauded of about Rs 114 billion by jeweller Nirav Modi, his maternal uncle Mehul Chinubhai Choksi, and other relatives through a clutch of companies they own.

In a letter to the chiefs of several banks, a general manager of PNB said the letters of undertakings (LoUs) are were opened in favour of branches of Indian banks for import of pearls for a period of one year, for which the Reserve Bank of India (RBI) guidelines stipulate a total time period of 90 days from the date of shipment, the Business Standard reported.

Three jewellers Gitanjali Gems and its subsidiaries Gili and Nakshatra are also under the scanner of investigation agencies, added report.

The stock of Gitanjali Gems plunged 19% to Rs 47.50, also its 52-week low on BSE in intra-day trade today, after falling 7% yesterday.

“The Bank has detected some fraudulent and unauthorised transactions (messages) in one of its branch in Mumbai for the benefit of a few select account holders with their apparent connivance. Based on these transactions other banks appear to have advanced money to these customers abroad,” PNB said on Wednesday in a regulatory filing.

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.

The quantum of such transactions is USD 1,771.69 Million (approx), it added.

The matter is already referred to law enforcement agencies to examine and book the culprits as per law of the land. The Bank is committed to clean and transparent banking, PNB said.

Punjab National Bank