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PNB Scam:CBI files second chargesheet

PNB Scam:CBI files second chargesheet

The share prices of Punjab National Bank (PNB) dropped by around 10 per cent in Wednesday's early morning trade.

"Without qualifying our opinion, we draw attention to Note No.11 regarding provision at 50% amounting to Rs. 7,178.42 crores as against the total amount of Rs 14,356.84 crore in respect of fraud involving certain accounts under Gems & Jewellery sector as per the dispensation given by the Reserve Bank of India", the auditors said.

The CBI on Monday filed its first chargesheet in the PNB fraud case detailing the roles of Nirav Modi, his brother Nishal Modi and Subhash Parab, an executive in Nirav Modi's company.

Apart from Usha Ananthasubramanian, former MD and CEO of PNB bank and current CEO of Allahabad Bank, two Executive Directors of PNB, KV Brahmaji Rao and Sanjeev Saran and a General Manager Nehal Ahad, the CBI chargesheet has named three firms owned by Choksi namely - Gitanjali Gems Limited, Gilli India Limited and Nakshatra Brand Limited.

The investigation has revealed that, during 2015 to 2017, the accused PNB officials fraudulently issued LoUs for obtaining buyer'scredit and FLCs to overseas banks in favour of the said three companies without any sanctioned limit or cash margin and without making entries in the CBS system of the bank.

PNB Scam:CBI files second chargesheet
PNB Scam:CBI files second chargesheet

"Their capital is very low, and a bank needs it to sustain growth", said Yuvraj Choudhary, an analyst at Mumbai brokerage Anand Rathi, who said PNB's reported loss was more than triple his estimate, calling it a "major concern". At that time, Ms Ananthasubramian sent a report saying there was no such fraud taking place at PNB, leading to suspicion against her.

PNB shares may take support around Rs 69 per share in the near term, said Deepak Jasani, Head of Retail Research, HDFC Securities.

The PSU lender said it made provisions and contingencies worth Rs 20353.10 crore for the quarter ended March. Out of this, the much talked about Nirav Modi scam accounted for about Rs 7580 crore, meaning the bank's lending moves left a lot to be desired.

It had reported standalone profit of Rs 261.90 crore in the fourth quarter of 2016-17.

To ensure proper checks and balances, PNB has gone for a four-way split for loan operations and created a focused off-site centre for monitoring all foreign exchange businesses.

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