Punjab National Bank considering monetising its assets

Punjab National Bank considering monetising its assets

Punjab National Bank is weighing its options to monetise its real estate assets. This includes a large office space in Delhi, estimated to be worth Rs. 50 billion.

According to Reuters, a source that wished to remain anonymous said that the bank is considering selling its assets through a tendering process and wants to accelerate the proceedings after unearthing a scam worth Rs. 11,400 crore, the biggest bank fraud in independent India’s history.

The case revolves around billionaire Nirav Modi who is said to have obtained illegal LoUs from PNB through two junior staff members to secure credit from overseas branches of Indian banks for his business that spreads from New York to Beijing.

PNB, India’s second-largest lender said that Nirav Modi and Mehul Choksi’s Gitanjali group of firms both received loans from other lenders based on the guarantee they obtained from the bank. Mehul Choksi is Nirav Modi’s uncle and has been accused by the CBI in a separate case for defrauding the bank of $763 million.

Scrutinizing the scam, the Enforcement Directorate conducted raids across dozens of locations linked to Nirav Modi and seized gold, jewellery and diamonds worth Rs. 56.49 billion. Twenty locations linked to Gitanjali across six cities were also searched. This included offices, factories and residences. Directors of the company are also under investigation.

Meanwhile, PNB’s Chief Executive Sunil Mehta said the bank was cooperating with the investigative agencies. Speaking on an investor conference call, he added, “The amount is big. But we will have the capacities to bring it back to normalcy, maybe within six months.”

Morgan Stanley, the global financial services firm has said that if PNB were to assume all the liability from the fraud it would need 80 billion rupees in an estimate as additional capital, which would mean a 14 percent dilution.

 

(Source: Reuters)

by TNBC Staff Reporter on February 17, 2018

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