Shares of public sector undertaking (PSU) banks were trading lower by up to 4% on the National Stock Exchange (NSE) on Wednesday after a media report suggested that Punjab National Bank (PNB) told police that it has uncovered additional exposure of about Rs 9.42 billion in connection with a massive alleged fraud.
“The amounts of Rs 9.42 billion were the regular limits sanctioned to Geetanjali Group under consortium lending, and were standard credit exposure at the time of detection of the fraud. Now, this exposure is being added to the existing fraudulent amount. This amount has nothing to do with any new fraudulent letters of undertaking (LoUs) and letters of comfort (LoCs),” PNB said on a clarification on news
Meanwhile, the Reserve Bank of India (RBI) on Tuesday discontinued issuance of LoUs and LoCs for importers with immediate effect, in an attempt to prevent fraud such as the one allegedly carried out by jewellers Nirav Modi and Mehul Choksi.
Letters of credit (LCs) and guarantees will continue to be issued like before if they meet certain criteria. CLICK HERE TO READ FULL REPORT
The stock of PNB dipped 4.4% to Rs 93.60 on the NSE in intra-day trade. Bank of India, Andhra Bank and Canara Bank were down more than 3%, while IDBI Bank, Allahabad Bank, Bank of Baroda, Oriental Bank of Commerce and Syndicate Bank down in the range of 2% to 3%.
At 09:30 am; the Nifty PSU Bank index, the largest loser among sectoral indices, down 2.2% erases its nearly entire 2.3% gain recorded on Tuesday. On comparison, the Nifty 50 index was trading lower 0.42% at 10,383.