PNB shares tank after lender detects another fraud

MUMBAI: Shares of Punjab National Bank (PNB) slumped over 7% on Monday after the lender was hit by yet another fraud, this time by Bhushan Power & Steel Ltd.

At 9.30 am, the stock was at ₹75.80 on BSE, down 5.57% from its previous close. It opened at ₹76.30 and touched a low of ₹75.80 or 7.3% lower. So far this year the stock fell 1.9%.

“The revealing forensic audit should become a part of good governance and best practices in the Indian banking universe. It would build confidence in the minds of the investors. For the time being, there could be a set back for the PNB stock," an analyst said on the condition of anonymity.

On Saturday, the bank reported ₹3,805.15 crore fraud with exposure of ₹3,800 crore includes domestic exposure of ₹3,191 crore, overseas exposure of $49.71 million at the bank's Dubai branch and $38.51 million at its Hong Kong branch.

Bhushan Power is one of the 12 accounts identified by the Reserve Bank of India (RBI) for insolvency proceedings.

PNB said the company misappropriated bank funds and manipulated books to raise funds from consortium lenders.

The latest fraud at the state-owned bank comes at a time when it is recovering from the Nirav Modi scam, where it was defrauded of ₹11,400 crore.

Of the analysts covering the stock, three have a “buy" rating, eight have a “hold" rating, while 20 have a “sell" rating, shows Bloomberg data.

Punjab National Bank