Urban Mirror Correspondent
New Delhi, May 20: The Punjab National Bank (PNB), one of the leading public sector banks in the country, has been facing immense crisis after Rs 14000 crore fraud by two jewellers Nirav Modi and Mehul Choksi. While there appears to be no early hope of these fugitives being brought to India for court trial, the investors are reportedly losing faith in dealing with state owned bank.
According to information the unprecedented fraud has landed the bank in distress. After the bank has pointed out that scam has touched 14.356.84 crore the RBI is now learnt to have allowed the bank to make provisions against this fraud to about 25%. The business analysts have also now started downgrading their ratings for the PNB.
According to information in banking sector the PNB has recorded provisions of up to Rs 20,353.10 crore in Q4FY18 increasing by 253.75% as against Rs 5,753.51 crore in Q4FY17, and also up by a huge 355.67% from Rs 4,466.68 crore in Q4FY18. This has caused a net loss of Rs 13,416.91 crore compared to net profit of Rs 261.90 crore in corresponding period of previous year and net profit Rs 230.11 crore in preceding quarter.
Even though the PNB management has been making bold face against all these odds, it appears that investors and market experts are not convinced because of heavy stressed assets. According to information gross NPAs were at Rs 86,620.05 crore up by 56.43% from Rs 55,370.45 crore in Q4FY17 and higher by 50.59% as against Rs 57,519.41 crore in Q3FY18. In percentage terms, gross NPAs stood at 18.38% in Q4FY18 versus 12.53% in Q4FY17 and 12.11% in Q3FY18.
Similarly on stock exchange PNB’s share price has also gone down by 23% and touched Rs 74.30 per piece last week. Analysts at Kotak Securities said, “The ramifications of the big fraud on the bank, both direct and indirect, has been far higher than initially anticipated. The bank has consumed a lot more capital and there would be further impact on Tier-1 ratio in the ensuing quarters till the balance sheet is stabilized.”
While the PNB has been grappling with its financial crisis, the scamsters Nirav Modi, Mehul Choksi and others are untraceable abroad. The investigating agencies CBI and ED have so far not been able to make any breakthrough to bring them back to India. The Lok Gathbandhan Party (LGP), which has been persistently raising the issue today expressed surprise that even after lapse of five months the NDA government has not been able to trace the two fugitives Nirav Modi, Mehul Choksi and several others. The party said the exercise of enforcement directorate (ED) of sending summons to these criminals through emails will not at all serve any purpose and ensure punishment to them.
The LGP spokesman said that after failing to serve email summons to Nirav Modi and Choksi, now the ED has sent these electronic summons to Nirav’s father and other family members who were his partners in the loot and now settled abroad. The spokesman said how ED could expect them to respond to emails and comply with orders when the main accused Nirav did not do so. The spokesman said this is nothing more than paper exercise and with this way the government will never be able to bring them to justice. The spokesman said if the criminals started responding to such emails, then other tactics would become redundant. It is simply directionless, the spokesman said, adding the failure of governmental agencies in tracking them down abroad is indeed shocking and reflected on their poor functioning. Pointing out that electronic summons are meaningless in such a case, the spokesman said the NDA government also appeared to be dilly-dallying in the matter for some mysterious reasons.
The spokesman said with extremely slow pace it will be difficult to bring back these criminals to India and ensure stringent punishment. The spokesman said both the criminals Nirav Modi and Mehul Chokis have made it clear to CBI that they would not return to India as they are busy in their business abroad. The spokesman said CBI is either helpless or politically under pressure to go slow to fade the case from the memory of the people, as has happened in previous such corruption issues. The spokesman said the NDA government has passed Fugitive Economic Offenders Bill to empower probe agencies but it has not helped in any way. The spokesman said there is no dearth of law in the country to act against the criminals but it required political will which NDA government lacked in this case.
The spokesman said the fraud has amply exposed weaknesses in the bank’s security system and maintenance of its records. The spokesman said with Rs 14000 crore PNB fraud, biggest ever in the banking sector the sector has totally failed to evolve a fool proof safeguard to protect the money of the customers. The spokesperson said banking sector in collusion with the politicians and businessmen has virtually pushed the entire financial system to the collapse.
