Shares in fraud-hit Punjab National Bank plunged more than 12 percent on Wednesday after it posted the largest ever quarterly loss for an Indian lender. PNB, the country's second-biggest state-run bank, has been reeling since announcing in February that it had been the victim of a 135 billion rupee ($2 billion) scam involving celebrity jeweller Nirav Modi. Investigators charged Modi in absence, as well as several senior PNB officials, on Monday over the huge fraud case, which comes as the government bids to clean up debt-laden lenders.
PNB said on Tuesday it had incurred a record 134.17 billion-rupee net loss for the January-March quarter, having posted a 2.62 billion-rupee profit in the same period last year. The bank has accused Modi and his uncle and business partner Mehul Choksi of defrauding it of 2.8 billion rupees, which was just part of its total losses. PNB said Modi and Choksi had scammed it by raising credit with international branches of other Indian banks, using illegal guarantees provided by rogue PNB employees.
The bank's fourth-quarter losses were largely incurred by having to set aside funds to pay the other banks for the illegal guarantees. PNB said it had allocated 71.78 billion rupees to pay around half the amount it owes in the three months to March 31, while setting aside the other 50 percent over the next three quarters.
Modi, the third generation of his family to go into the diamond trade, is worth $1.73 billion according to Forbes, placing him 85th on India's rich list.
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