Mumbai — India’s second-biggest state-run bank has detected a $1.8bn fraud at a single branch in the nation’s financial hub, and says the impact could extend to other lenders as well.
Punjab National Bank has detected some fraudulent and unauthorized transactions in one of its branches in Mumbai “for the benefit of a few select account holders with their apparent connivance,” it said in an exchange filing on Wednesday.
“Based on these transactions other banks appear to have advanced money to these customers abroad.”
Investigative agencies had been informed, PNB said.
The bank did not elaborate on what impact the fraud may have on its books and did not name the other lenders that could be hurt.
PNB shares fell the most in a week on the news.
“So far there is no clarity on impact on the lender’s bottom line from this,” said Asutosh Kumar Mishra, a Mumbai-based banking analyst at Reliance Securities.
“There is no clarity on whether these transactions are reversed, whether the bank is holding collateral that could back part of these transactions or whether enforcement authorities will be able to recover this amount.”
The fraudulent transactions are the equivalent of eight times the lender’s 2017 net income of about 13.2-billion rupees ($206m), exchange filings show.
PNB shares were trading 4.1% lower at 155 rupees at 9.49am in Mumbai.
It was also unclear whether the fraud was linked to another case PNB had reported earlier this month, where a jeweller allegedly acquired fraudulent letters of undertaking worth 2.8-billion rupees from PNB in order to obtain loans.
At the time PNB had said it was digging into records to see whether the hit was much deeper.