Scam-hit Punjab National Bank incur heavy loss in fourth-quarter

Lloyd Doyle
May 16, 2018

Thanks to a reprieve from RBI, the bank made provisions of Rs 7,178 crore for Nirav Modi fraud during the March quarter, with an equal amount to be set aside during the first three quarters of the current financial year. "The Board of Directors of the Bank in its meeting held on date has decided that Usha Ananthasubramanian, MD & CEO be divested of all functional responsibilities of the Bank with immediate effect", Allahabad Bank said in a regulatory filing.

During the fourth quarter, the bank posted a net loss of Rs 13,417 crore. The bank's bottom line was hit by exceptionally high provisioning made for fake letters of undertaking (LoUs) given to other lenders and high NPAs. Over the last couple of years, following the central bank's directive that mandates banks to disclose all their bad and doubtful loans, several public sector banks have been reporting huge amounts of bad loans and Punjab National Bank figures among the banks that are worst hit due to heavy defaults by borrowers.

PNB's share has dropped from a level of Rs 194 crore in January-end before the scam was revealed to a level of Rs 83.85 on Tuesday end of trade after tanking 6% post the announcement of its quarterly results.

The plea was opposed by CBI advocate Rajdipa Behura, who said the investigation was in progress and if Rishi was allowed to go to the United States and if he did not return, the probe would be stalled.

Moreover, the bank has created liability in the books in respect of LOUs/FLCs which were due after March 31 amounting to Rs 6959.79 crores. Out of this, the much talked about Nirav Modi scam accounted for about Rs 7580 crore, meaning the bank's lending moves left a lot to be desired.

PNB accounted for Rs 44274 crore of incremental bad loans in the March quarter - including Rs 7579 crore related to the fraud and 102.37 billion rupees after the stricter RBI rules - taking its gross non-performing assets ratio to 18.38 percent of the total at the end of March. Net NPAs also rose to Rs 48,684 crore from Rs 32,702 crore over this period. Non-interest income or other income halved to Rs 1,561 crore versus Rs 3,102.80 crore in March quarter ending 2017. Its operating expenses rose Rs 5,072 crore in Q4 due to high contribution into the pension schemes as compared to Rs 555 crore a year ago. The bank's provisions for bad debt and fraud shot up almost five times from Rs 4,467 crore in the quarter ended March 2017 to over Rs 20,000 crore during the last quarter, a bulk of which was due to NPAs. In the fourth quarter, the bank's gross domestic business grew 7.8 per cent on annual basis over the corresponding period a year ago to Rs 10.31 lakh crore, PNB said in a statement.

Other reports by Iphone Fresh

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