$1.8 billion fraud at a single branch of Punjab National Bank in Mumbai

Mumbai: India’ second biggest state-run bank, Punjab National Bank has detected a $1.8 billion fraud at a single branch in Mumbai.

Already, Indian banks are reeling under pressure of bad loans and have poor bad-loan ratios among big economies. Such fraudulent cases will definitely have impact on the other lenders as well.

According to the news reported in NDTV which had published this news from a syndicate feed, PNB in an exchange filing on Wednesday said “it that has detected some fraudulent and unauthorized transactions in one of its branches in Mumbai for the benefit of a few select account holders with their apparent connivance. Based on these transactions other banks appear to have advanced money to these customers abroad.”

This case is likely to create a challenge for CEO of the bank Sunil Mehta, who took charge in May last year.

Asutosh Kumar Mishra, a Mumbai-based banking analyst at Reliance Securities Ltd said that “So far there is no clarity on impact on the lender’s bottom line from this,” he further added that “There is no clarity on whether these transactions are reversed, whether the bank is holding collateral that could back part of these transactions or whether enforcement authorities will be able to recover this amount.”

According to the figures showed in the exchange filings, the amount involved in the fraudulent transactions is equivalent to of eight times the lender’s 2017 net income of about 13.2 billion rupees ($206 million).