PNB detects Rs 11,500 crore worth of fraudulent transactions in Mumbai branch

MUMBAI: State-run Punjab National Bank said on Wednesday it had detected some “fraudulent and unauthorised” transactions worth more than Rs 11,500 crore at one of its branches in Mumbai.

The bank said in a regulatory filing 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.”

PNB did not 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.

Investigative agencies have been informed about the latest fraud transactions, PNB said. The bank didn’t elaborate on what impact the fraud may have on its finances and it didn’t name the other lenders which could be hurt.

“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.

“So far there is no clarity on impact on the lender’s bottom line from this,” said Asutosh Kumar Mishra, a Mumbai-based banking analyst at Reliance Securities Ltd.

“There is no clarity on whether these transactions are reversed, whether the bank is holding collateral that could back part of these transactions or whether enforcement authorities will be able to recover this amount.”

PNB shares were trading 5.38 per cent lower on the BSE at 10.57 am. The broader index was fairly flat.

PNB is already dealing with other allegations of fraudulent transactions. Last week, an investigation was launched into billionaire jeweller Nirav Modi, one of the country’s richest men, over accusations that he and others defrauded PNB of Rs 282 crore.

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

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