Punjab National Bank (PNB), one of the big government banks of the country, has once again created a stir in the banking sector. The bank has informed the Reserve Bank of India (RBI) about loan fraud of Rs 2,434 crore. This matter is related to two companies of SREI Group, SREI Equipment Finance and SREI Infrastructure Finance, whose old promoters are said to be involved in this.
PNB has said in the information given to the stock market that the fraud related to SREI Equipment Finance is about Rs 1,241 crore, while the amount related to SREI Infrastructure Finance is about Rs 1,193 crore. It is a matter of relief that in both these cases the bank has already made 100 percent provision for its entire outstanding amount, which means there will be no direct impact on the bank’s accounts.
Solution reached through NCLT
The case of both the companies was heard in the National Company Law Tribunal (NCLT) under the corporate insolvency resolution process. Later their solution was also approved. After the approval of the plan of National Asset Reconstruction Company (NARCL) in August 2023, the boards of the companies were reconstituted.
Panjab Nation Bank
SREI Group had entered the finance sector in 1989 and was considered to have a strong hold especially in the finance of construction equipment. But due to mismanagement and huge defaults, the company had to face bankruptcy proceedings in October 2021.
How is PNB’s health?
PNB said that the bank’s provision till September quarter stood at Rs 643 crore, which is more than last year. The provision coverage ratio of the bank has now increased to 96.91%, which is being considered a positive sign in terms of asset quality of the bank.
Share status?
Talking about the stock market, before this disclosure, PNB shares had closed at Rs 120.35 with a slight decline of 0.50 percent. However, since the beginning of the year till now the stock has seen an increase of about 17 percent. At the same time, the stock has given a return of 144 percent during 3 years. The market cap of the company was recorded at Rs 1,39,007 crore.