Punjab National Bank (PNB) has come under heavy scrutiny after revealing a massive borrowing fraud worth over Rs 2,434 crore.
What happened?
The bank said two former promoters of SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL) were involved in wrongful borrowing. The fraud amount is split as follows:
- SEFL – Rs 1,240.94 crore
- SIFL – Rs 1,193.06 crore
PNB has set aside a full provision for the entire exposure.
Background of the companies
Both SEFL and SIFL had earlier gone through the Corporate Insolvency Resolution Process (CIRP) after the RBI stepped in in October 2021, replacing their boards because of governance concerns and huge repayment defaults (nearly Rs 28,000 crore).
How the news affected PNB’s stock
After the disclosure on Friday, PNB’s share closed at Rs 120.25 on the NSE, down 0.6% for the day. Over the past year the stock has risen about 18%, but it slipped 3.7% in the last month, showing a short‑term correction.
Key takeaways for investors
- PNB has fully provisioned for the loss, which may limit further surprises.
- The fraud involves large, well‑known finance firms, raising questions about credit risk monitoring.
- Short‑term price volatility is possible, but the longer‑term trend for PNB remains positive.
What to watch next
Investors should keep an eye on:
- Any regulatory action or penalties from the RBI.
- Updates on the resolution of SEFL and SIFL cases.
- PNB’s quarterly earnings to see if the provision impacts profitability.
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.