"Based on these transactions other banks appear to have advanced money to these customers abroad," said Punjab National Bank.
PNB did not mention the impact the fraud may have on its financials. "These transactions are
contingent in nature and liability arising out of these on the Bank shall be decided based on the law and genuineness of underlying transactions. The quantum of such transactions is $1771.69 million (approx). The matter is already referred to law enforcement agencies to examine and book the culprits as per law of the land," PNB noted.
Broadly, the shares of public sector banks were under pressure after Reserve Bank of India (RBI) tightened rules around bank loan defaults, seeking to push more large loan defaulters towards bankruptcy courts and abolishing half a dozen existing loan-restructuring mechanisms. This could lead to higher provisioning, say some analysts, hurting the finances of banks. The index for PSU banking stocks on NSE settled nearly 5 per cent lower.
Among individual stocks, SBI shares fell close to 4 per cent while Bank of Baroda declined 2 per cent. PNB shares ended nearly 10 per cent lower at Rs 145.80.