Money & Banking

PNB revises provision amount for DHFL Borrowal Fraud

KR Srivats New Delhi | Updated on July 10, 2020 Published on July 10, 2020

A day after reporting a Borrowal Fraud of ₹3,688.58 crore in the NPA Account of Dewan Housing Finance Ltd (DHFL), Punjab National Bank (PNB) has now revised the provision it has made on this front.

“In this regard, we wish to submit that the provision figure be read as ₹1,695.73 crore instead of ₹1,246.58 crore,” PNB said in a regulatory filing with stock exchanges on Friday.

It may be recalled that PNB had on Thursday said that it had already made provisions amounting to ₹1,246.58 crore as per prudential norms.

Meanwhile, it is learnt that there was no fraud on the amounts disbursed to DHFL by the erstwhile PNB (bank before amalgamation) although it has now turned a NPA account. There was no end use violations. However, in the case of Oriental Bank of Commerce and United Bank, DHFL was a NPA and there was a borrowal fraud.

So post the amalgamation, PNB had to report the borrowal fraud for the combined entity, sources said.

Once a fraud is reported, the bank will have to provide 100 per cent of the amount involved in its profit and loss account. PNB could either provide for the entire remaining amount of about ₹2,000 crore in the June quarter itself or spread the amount of provisioning in the coming quarters, sources said.

Now that new PNB (post amalgamation with Oriental Bank of Commerce and United Bank of India) has a much stronger balance sheet, the senior management may take a decision of providing it at one go, sources said.

The three-way amalgamation, which catapulted PNB as India’s second largest public sector bank, came into effect from April 1.

PNB has also announced plans to raise upto ₹10,000 crore in the coming days. Of this, as much as ₹7,000 crore will be equity and ₹3,000 crore will be bonds.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on July 10, 2020
This article is closed for comments.
Please Email the Editor