Punjab National Bank buries Nirav Modi fraud, reports Rs 940 crore Q1 loss

Guwahati: The fraud-hit Punjab National Bank has, after a lot of efforts managed to recover from the grim phase after it was badly struck by the Nirav Modi fraud earlier this year. The bank put in a lot of efforts to recover bad debts and took up cost-cutting measures. It also had to close many of its domestic and international branches.

The bank reported a loss of Rs 940 crore in the first quarter of current fiscal year against a profit of Rs 343 crore a year ago. The bank had reported a historic loss of Rs 13,417 crore in the fourth quarter of 2017-18 on account of provisioning for non-performing assets (NPAs) due to tighter loan classification norms by the Reserve Bank India, the PNB fraud-related payouts to other banks, as well as losses in the bond portfolio.

Punjab National Bank had been hit by a mammoth Rs 14,356 crore fraud, involving jewellers Mehul Choski and Nirav Modi. The bank was also under RBI-scanner and came close to being placed under the Reserve Bank of India’s prompt corrective action framework on account of rising non-performing assets and falling capital adequacy ratio.

Managing Director and Chief Executive Officer of Punjab National Bank, Sunil Mehta said in a press conference that the bank has taken corrective measures and introspected on its decisions.

Speaking on the future, Mehta said that PNB will focus on recovery of non-performing assets( NPA) and conservation of capital. The bank has also sought approval from the RBI to raise funds from its employees in the form of stocks.

The common equity ratio of Punjab National Bank has also improved to 6.05% from 5.96%. If one takes into account the Rs 2,816 crores infused by the government in July, the bank’s capital adequacy ratio has improved to 10.3%.

Net interest margin, a key measure of profitability, improved to 2.9% from 2.56% in the year-ago period. Net interest income was up 21.7% to Rs 4,692 crore.