How Did PNB Shares Bounce Back After Reporting a Rs 2,434 Crore Loan Fraud?
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Synopsis
In a surprising turn of events, Punjab National Bank shares rebounded after disclosing a significant loan fraud of Rs 2,434 crore. This report details the circumstances surrounding the fraud and the bank's response, shedding light on the broader implications for the banking sector.
Key Takeaways
- PNB shares initially fell but later recovered following a fraud report.
- The loan fraud amounted to Rs 2,434 crore, linked to SREI companies.
- PNB has fully provisioned for the fraud's outstanding amount.
- SREI companies are currently under resolution and have significant debts.
- PNB has shown strong performance over multiple time frames despite recent declines.
Mumbai, Dec 29 (NationPress) Shares of the government-owned Punjab National Bank (PNB) witnessed a recovery on Monday following a previous decline. This rebound came after the bank disclosed a loan fraud amounting to Rs 2,434 crore last week, allegedly perpetrated by the former promoters of SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL).
Earlier in the day, PNB's shares had plummeted by as much as 3.1 percent, trading at Rs 116.6 each, but later rose to Rs 120.55, reflecting a modest increase of 0.15 percent by 11:44 am.
The public sector lender informed the Reserve Bank of India about the Rs 2,434 crore loan fraud, citing in a regulatory report that the former promoters were responsible for frauds totaling Rs 1,240.94 crore and Rs 1,193 crore from SEFL and SIFL, respectively.
The bank has established full provisions for the entire outstanding sum, as noted in the report. In October 2021, the RBI took control of the boards of SIFL and its wholly-owned subsidiary, SEFL.
Nonetheless, the Srei group has contested the forensic audit report that served as the foundation for the fraud designation, stating that the matter is currently in litigation.
Other financial institutions, including Punjab & Sind Bank, Bank of Baroda, and Union Bank of India, have also previously reported loan frauds concerning Srei companies.
SEFL and SIFL, which together held financial liabilities of approximately Rs 32,700 crore, underwent resolution under the Insolvency and Bankruptcy Code and were taken over by the National Asset Reconstruction Company Ltd in December 2023.
The public sector lender's shares have shown strong performance across multiple time frames, with year-to-date, 1-year, 3-year, and 5-year growth rates of 17.43 percent, 18.84 percent, 117.60 percent, and 263 percent respectively, despite a 3.17 percent decline over the past month.
PNB also reported a 14 percent increase in standalone net profit, rising to Rs 4,904 crore for the September quarter of FY26, compared to Rs 4,303 crore the previous year.
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Point of View
It's crucial to note that while the loan fraud incident is significant, PNB's proactive measures to provision for the losses reflect a commitment to transparency and accountability. The market's reaction is indicative of investor confidence in the bank's management and recovery strategies. This case underscores the importance of robust financial oversight in the banking sector.
NationPress
08/01/2026
Frequently Asked Questions
What caused the fall in PNB shares?
The decline in PNB shares was primarily due to the announcement of a loan fraud totaling Rs 2,434 crore linked to former promoters of SREI Equipment Finance Ltd and SREI Infrastructure Finance Ltd.
How much has PNB provisioned for the loan fraud?
PNB has made 100 percent provisions against the entire outstanding amount related to the loan fraud.
What is the current status of SREI companies?
SREI Equipment Finance Ltd and SREI Infrastructure Finance Ltd went through resolution under the Insolvency and Bankruptcy Code and were acquired by the National Asset Reconstruction Company Ltd in December 2023.
Have other banks reported similar frauds?
Yes, other banks like Punjab & Sind Bank, Bank of Baroda, and Union Bank of India have also declared loan frauds involving SREI companies.
How has PNB performed financially in recent quarters?
PNB reported a 14 percent increase in standalone net profit for the September quarter of FY26, rising to Rs 4,904 crore.
