The Centre will wait for further assessment of the fraud by billionaire jeweller Nirav Modi before taking a call on additional capital infusion for Punjab National Bank.
“There is no need for an immediate decision on higher capital allocation. An amount for the recapitalisation of the bank has already been provided for the current fiscal,” said a source, adding that for next fiscal, the recapitalisation amount will be decided after another four to five months.
“The exact impact of the fraud is still being looked into and new information is coming up on a daily basis. It is too early to decide,” he said, adding that if required, the government will increase the capital infusion plan for the bank.
The Finance Ministry has allocated ₹5,473 crore to Punjab National Bank as part of the capital infusion plan for 2017-18.
PNB, which is the second-largest state-run lender, has also called an extraordinary general meeting on March 16 to get approval to issue 33.49 crore shares to raise the amount through preferential issue to the government. On February 14, PNB had reported an ₹11,300-crore fraud by the Nirav Modi Group and the Mehul Choksi Group to the stock exchanges. Since then it has said that the amount involved in the fraudulent transactions could increase further to ₹12,700 crore.
Finance Ministry officials said that the focus at present is to review the losses and make full efforts at recovery. “Any request from the bank for fund support will be fully looked into but it may not take place immediately,” said the official.
Analysts and rating agencies such as Moody’s have pointed out that PNB needs to raise more capital from external sources, which would mainly be from the government.