Bank Of India Has Rs 200 Crore Exposure In PNB Scam, Initiates Proceedings
Bank of India has initiated insolvency proceedings against Nirav Modi firms.
Bank of India Ltd. has an exposure of Rs 200 crore to the Punjab National Bank fraud case and the public sector lender has initiated insolvency proceedings against Nirav Modi firms, according to a top official of the bank.
“We have some exposure [in the PNB fraud case]. We are participating in the resolution process. It [the exposure] was around Rs 200 crore. We are participating in the insolvency process overseas also,” Dinabandhu Mohapatra, the bank’s managing director and CEO told PTI.
“Let’s hope for the best,” he said.
Diamond merchants Nirav Modi and his uncle Mehul Choksi allegedly perpetrated the country’s biggest banking sector scam of Rs 13,000 crore at Punjab National Bank Ltd., mainly by way of issuance of fraudulent Letters of Undertaking.
The Centre has also intervened in the bankruptcy proceedings of the Modi firms in the U.S. to protect the interests of PNB.
Mohapatra said the bank’s profitability was hit during the October-December quarter largely due to higher provisions it made for some of the large accounts that were downgraded by the Reserve Bank of India.
During the fourth quarter, the bank recovered about Rs 9,000 crore of the non-performing assets and is hopeful of better results during the current financial year, he added. Bank of India reported a net loss of Rs 2,341.10 crore during the quarter ended Dec. 31, as provisions for bad loans rose 72 percent as asset quality deteriorated.
Non-performing assets, as a percentage of total assets, grew to 16.93 percent of the gross loans by end of December 2017 from 13.38 percent from December end 2016. Net NPAs rose to 10.29 percent from 7.09 percent last year.
We did well in June and September quarters (of last fiscal). Then in December quarter some accounts of March 17 were downgraded by the regulator (RBI). But during the quarter-Q4 we have recovered around Rs 9000 crore of NPAs that were downgraded during the inspection.Dinabandhu Mohapatra, MD & CEO, Bank of India
“That’s a good sign. It will help us in managing NPA position,” he added.
According to him, Bank of India is one of the few banks which have a provisional coverage ratio of 65 percent of . He hoped that the situation will altogether be different as he sees reversal of provisioning of some major accounts.
“First quarter of the current fiscal will be much better in all fronts,” he said.