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PNB Fraud Gets Bigger, Now Estimated At Rs 12,700 Crore: 5 Points

PNB or Punjab National Bank has said that the amount of unauthorised transactions could go up by more than Rs 1,300 crore.

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PNB Fraud Gets Bigger, Now Estimated At Rs 12,700 Crore: 5 Points

The scam was perpetrated by way of fraudulent Letters of Undertaking generated in the name of PNB


Punjab National Bank or PNB, which earlier this month announced detection of an alleged fraud worth an estimated Rs 11,400 crore at one of its Mumbai branches, on Monday said the amount of the scam could go up by Rs 1,300 crore. That would make the PNB scam to be worth Rs 12,700 crore. At Rs 11,400 crore, the PNB scam is already one of the biggest in the country's banking system. The bank also referred to its filing made on February 14 when it first disclosed the fraud and at that time, the "fraudulent and unauthorised transactions" was estimated at $1.77 billion (about Rs 11,400 crore). PNB shares slumped over 7 per cent to fresh 52-week low of Rs 102.10 in early trade today. 

Here are five things to know about the PNB scam:

1. In a filing to the BSE late on Monday, PNB said the amount of unauthorised transactions could go up by more than Rs 1,300 crore. "...We have to inform that quantum of reported unauthorised transactions can increase by $204.25 million (approximately)," PNB said in its regulatory filing.

2. At the current exchange rate, the amount comes to around Rs 1,323 crore.

3. On February 14, the bank had detected the fraud wherein billionaire jeweller Nirav Modi and associates had allegedly acquired fraudulent letters of undertaking (LoUs) from one of the branches of the PNB for overseas credit from other Indian lenders.

4. The scam was perpetrated by way of fraudulent Letters of Undertaking (LoUs) generated in the name of Punjab National Bank.

5. Bad loans: The discovery of the scam by state-run Punjab National Bank comes at a time when banks in the country are struggling with over Rs. 9.5 lakh crore ($148 billion) in non-performing assets (NPAs) or bad loans. These soured loans include non-performing, restructured or rolled-over loans and state-run banks account for the bulk of these loans.


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