Punjab National Bank has reported a significant borrowal fraud case totaling ₹2,434.00 crore to the Reserve Bank of India against the erstwhile promoters of SREI Equipment Finance and SREI Infrastructure Finance. The state-owned bank announced this development through its official filing to the exchanges on Friday, demonstrating its commitment to regulatory compliance and transparency.

Complete Fraud Breakdown and Provisions

The fraud case involves two key entities within the SREI Group, with specific amounts now confirmed for both entities. The bank has taken comprehensive action to address the fraudulent activities perpetrated by the former promoters of these infrastructure and equipment financing companies.

Regulatory Compliance and Resolution Process

Punjab National Bank has made 100% provision for the outstanding amounts related to both SREI entities, ensuring complete coverage for the fraudulent exposure. The comprehensive provisioning approach reflects the bank's conservative risk management strategy and provides adequate protection against potential losses. The bank's prompt reporting to the Reserve Bank of India aligns with regulatory guidelines under Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.

Corporate Insolvency Resolution Outcome

Both SREI Equipment Finance and SREI Infrastructure Finance have been successfully resolved under the Corporate Insolvency Resolution Process by the National Company Law Tribunal. This resolution provides closure to the complex case involving the erstwhile promoters and marks a significant step in addressing the fraudulent activities within the SREI Group.

Market Impact and Financial Position

Shares of Punjab National Bank ended lower by 0.56% at ₹120.25 on Friday following the disclosure. The substantial fraud amount represents a significant exposure for the public sector bank, but the complete provisioning demonstrates proactive risk management. By making full provisions for both entities and successfully navigating the resolution process, Punjab National Bank has taken comprehensive steps to manage the financial impact while maintaining stakeholder confidence.

Punjab National Bank has been added to the BSE Bankex index as part of today's index rejig, scheduled to take effect at 3pm. The inclusion involves an addition of USD 15.00 million, marking a notable development for the public sector banking major.

Index Inclusion Details

The BSE Bankex rejig today brings Punjab National Bank into the banking index, which tracks the performance of leading banking stocks on the Bombay Stock Exchange. The timing of the inclusion is set for 3pm today, following the standard protocol for index changes.

Market Implications

The addition to BSE Bankex represents recognition of Punjab National Bank's market standing within the banking sector. Index inclusions typically generate interest from institutional investors and index funds that track the respective indices, potentially influencing trading patterns.

About the Development

This index rejig positions Punjab National Bank among the constituents of BSE Bankex, which serves as a benchmark for banking sector performance. The USD 15.00 million figure associated with this inclusion reflects the scale of the adjustment in the index composition.