Punjab National Bank Shares In Focus On Reporting Loan Fraud To RBI

Shares of Punjab National Bank Ltd. are going to be in focus in trade today. The PSU bank has reported a fraud of over Rs 2,000 crore to the Reserve Bank of India against the erstwhile promoters of two entities.

The case involves loan accounts of SREI Equipment Finance Ltd., linked to a fraud amounting to Rs 1,241 crore, and SREI Infrastructure Finance Ltd., with Rs 1,193 crore. The state-owned bank has fully provisioned for these outstanding amounts, as disclosed in its stock exchange filing.

Both companies were resolved through the Corporate Insolvency Resolution Process (CIRP) under the supervision of the National Company Law Tribunal (NCLT).

SREI Infrastructure Finance began operations in 1989 as a financier for construction equipment. Following the successful execution of the Resolution Plan by National Asset Reconstruction Company Ltd. (NARCL), approved by the NCLT in August 2023, the company's board was restructured, according to its official website.

The insolvency proceedings for the SREI Group NBFCs commenced in October 2021 after directives from the Reserve Bank of India (RBI). The RBI had superseded the boards of SIFL and SEFL, citing governance lapses and repayment defaults totaling nearly Rs 28,000 crore.

As of the September quarter, Punjab National Bank (PNB) reported provisions of Rs 643 crore, marking an increase both year-on-year and quarter-on-quarter.

The Provision Coverage Ratio (PCR), including technical write-offs—a key indicator of how much of a bank's non-performing assets are covered by provisions—rose by 24 basis points year-on-year to 96.91% in Q2.

Of the analysts that are tracked by Bloomberg and have coverage on this stock, 12 have a 'buy' call, 4 have a 'hold' stance, and 5 have a 'sell' rating on the stock.

Shares of Punjab National Bank settled 0.5% lower at Rs 120.35 on the BSE, ahead of the disclosure, compared to a 0.4% fall in the benchmark BSE Sensex. The stock is up 17% year-to-date.

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