The stock of Punjab National Bank took a pasting on Wednesday following the bank’s disclosure that fraudulent and unauthorised transactions aggregating about $1.8 billion was detected in one of its branches in Mumbai.
Besides the possible ripple effect of PNB’s disclosure on other banks, reports that RBI’s new debt resolution framework could result in an increase in non-performing assets of banks, and consequently, in a heavier provisioning burden, impacted bank stocks in general.
The PNB stock closed at ₹144.85 apiece, down 10.39 per cent from the previous close of ₹161.65 on the NSE.
The bank’s complaint for registration of first information report against accused persons for having committed offences of cheating and fraud, thereby causing a loss to the banks, mentions that two branch officials from the mid-corporate branch at Brady House, Mumbai, issued letters of undertaking (LOU) in favour of Allahabad Bank and Axis Bank in Hong Kong.
Allahabad Bank shares closed at ₹55.95, down 8.05 per cent; Axis Bank, which is part of the 12-stock NSE Nifty Bank Index, closed at ₹541.80, down 3.97 per cent.
Analysts said there is no clarity on how this would impact the profits of PNB and whether the bank would be able to recover the amount. Till clarity emerges, banking stocks, especially PSBs, will remain volatile, they opined.
The Nifty Bank Index, comprising 12 bank stocks, declined 360 points (or 1.4 per cent) to close at 25,341. Of the 12 bank stocks, nine declined, two advanced and one remained unchanged. On Wednesday, of the NSE’s 11 sectoral indices, the Nifty PSU Bank Index saw the biggest fall of 4.78 per cent, followed by the Nifty Private Bank Index, which declined 1.16 per cent.
Among the Nifty Bank Index stocks, the nine stocks that closed down were: PNB (10.39 per cent), Canara Bank (5.96 per cent), YES Bank (4.79 per cent), State Bank of India (4.59 per cent), Axis Bank (3.97 per cent), Bank of Baroda (2.82 per cent), ICICI Bank (2.64 per cent), Kotak Bank (0.39 per cent) and IndusInd Bank (0.34 per cent).
The two Nifty Bank Index stocks that edged up were — HDFC Bank (0.17 per cent) and Federal Bank (0.11 per cent). The IDFC Bank stock closed unchanged.