Punjab National Bank Makes $226 Million Provision on Dewan Fraud
(Bloomberg) -- Punjab National Bank, India’s second-largest state-run lender that has been hit by a slew of recent scandals, on Friday said it has set aside provisions of about 17 billion rupees ($226 million) for a fraud linked to a bankrupt shadow financier.
The bank had on Thursday reported the 36.9 billion rupee fraud in the accounts of Dewan Housing Finance Corp. At the time it had said it provided 12.5 billion rupees, and then revised the figure in a Friday filing.
Dewan Housing is a financier seized by the regulator in November as India stepped up efforts to contain a brewing shadow banking crisis. Punjab National Bank in June reported about 735 billion rupees of gross bad loans for the quarter ended March 31 -- 14.21% of total advances down from 15.5% the previous quarter.
This is the fourth scandal Punjab National Bank is complaining of in three years. In 2018 it alleged it was swindled of $2 billion by a jeweler who colluded with bank officials. It reported two more incidents stemming from improper loans last year.
Managing Director S.S. Mallikarjuna Rao had said in June the lender is clearing a backlog of provisions and expects to post net income in every quarter of the financial year started April 1. He also said Punjab National Bank is looking to cement more prudential measures to avoid potential fraud.
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