PNB single branch conned by £1.3bn fraud
Punjab National Bank, one of India’s second largest banks has uncovered fraudulent payments worth £1.3bn ($1.8bn) to a handful of customers made through a single branch in Mumbai. Based on these transactions, other banks appear to have advanced money to these customers abroad.
Shares in PNB fell dramatically to 10.4 per cent yesterday, valuing the bank at $5.5bn compared to its declared book value of £7.6bn. The news further added shock waves to banking stocks after the central bank’s announcement of tougher norms for bank’s handling of their bad loans, forcing them to act more swiftly in recognising losses. Stocks of Bank of India fell 8 per cent, State Bank of India 4.6 per cent.
On February 5th, 2018, PNB had announced a suspected fraud worth £31.68m ($44m) without giving enough details.
Analysts often attribute the crisis is largely due to bank management’s failure to carry out proper assessments of client risk.
Billionaire Indian-born jewellery designer and founder of $2.3bn revenue Firestar Diamond, Nirav Modi, who is at the centre of the mega scam, was booked by Central Bureau of Investigations, along with his wife, brother and business partner Choksi on January 31, for allegedly cheating PNB to the tune of £31.5m. The bank had suspended 10 0fficers and has initiated criminal proceedings against suspected guilty bank employees.
The Enforcement Directorate on Thursday raided 12 premises of billionaire diamond jeweller Nirav Modi in Delhi, Surat, Mumbai allegedly in connection with the $1.8bn PNB fraud. Nirav Modi reportedly left India even before the bank had filed an FIR in the £31.5m fraud case.