Government, LIC Lose Over $10 Billion In State-Owned Bank Rout
The fraud at the Punjab National Bank has wiped out more than $10 billion from the value of the government and the Life Insurance Corporation of India's holding in state-owned lenders.
The Nifty PSU Bank Index has fallen over 22 percent from the highs seen after the government announced Rs 2.11 lakh crore fund infusion plan on Oct. 24 last year. Lenders like PNB, United Bank of India, Andhra Bank and Bank of India are trading below the closing prices of Oct. 25, according to Bloomberg data. All 12 index constituents have since fallen.
Shares fell after PNB disclosed that billionaire jeweller Nirav Modi had obtained loans worth $1.77 billion or Rs 11,400 crore on fraudulent guarantees.
Lenders in Nifty PSU Bank Index have together lost Rs 1.07 lakh crore since their October peaks, data compiled by BloombergQuint show. The government being the majority shareholder in the lenders has seen the value of its holding eroded by Rs 59,000 crore. Institutional investor LIC's stake is now worth Rs 12,000 crore less. Cumulative, the two have lost $10 billion or Rs 70,750 crore in the bank rout.