Shares in Punjab National Bank, one of India’s largest lenders, have fallen more than 4 per cent after it announced the detection of fraudulent transactions worth $1.77bn.
In a notification to stock exchanges, it said the “fraudulent and unauthorised transactions” had been made at one of its branches in Mumbai “for the benefit of a select few account holders with their apparent connivance”.
“Based on these transactions other banks appear to have advanced money to these customers abroad,” it added.
The bank said its liability with regard to the transactions remained to be established, and that the matter had been referred to law enforcement agencies.
With assets of Rs7.3tn ($113bn) at the end of the last financial year, PNB is the second-biggest by that measure of India’s state-controlled lenders, which dominate the country’s banking sector. The quality of oversight at the state banks has come under heavy scrutiny in recent years amid a snowballing crisis of bad corporate loans, which forced the government to announce a $32bn recapitalisation plan in October.