Shares of Punjab National Bank (PNB) experienced significant volatility in Monday's trading session on December 29, initially plunging before staging a recovery. The pressure followed the bank's disclosure of a substantial borrowal fraud.
Sharp Intraday Swing After Fraud Disclosure
The stock opened under heavy selling pressure, dropping by 3% to an intraday low of ₹116.60. This sell-off was a direct reaction to the bank's filing about a fraud case. However, demonstrating resilience, the shares managed to recoup the early losses. By the end of the session, PNB was trading with a mild gain of 0.36% at ₹120.75 per share.
Details of the ₹2,434 Crore Borrowal Fraud
On Friday, PNB formally informed the Reserve Bank of India (RBI) about a fraud amounting to approximately ₹2,434 crore. The case is linked to the former promoters of SREI Equipment Finance Ltd (SEFL) and SREI Infrastructure Finance Ltd (SIFL).
According to the bank's filing, ₹1,241 crore of the total is associated with a loan account of SREI Equipment Finance Ltd., while ₹1,193 crore relates to SREI Infrastructure Finance Ltd. PNB clarified that it has already made provisions for the entire outstanding amount, mitigating the immediate financial impact.
The two SREI entities, which had a combined financial debt of ₹32,700 crore, were resolved under the Corporate Insolvency Resolution Process (CIRP) overseen by the National Company Law Tribunal (NCLT). In December 2023, the National Asset Reconstruction Company Ltd (NARCL) acquired them as the new promoter.
The saga began in October 2021 when the RBI superseded the boards of both SIFL and its subsidiary SEFL. The Kolkata-based Kanoria family, with Hemant Kanoria as the key face, had controlled the companies until the central bank intervened over alleged mismanagement, leading to Insolvency and Bankruptcy Code (IBC) proceedings.
Strong Quarterly Performance Amid Challenges
Despite the fraud disclosure, the bank's recent financial performance shows strength. For the quarter ending September, PNB reported a 13.94% rise in net profit to ₹4,903.7 crore, compared to ₹4,303.4 crore in the same period last year.
The bank's total interest income grew by 6.7% to ₹3,187 crore from ₹2,987 crore a year earlier. However, the net interest income remained largely stable at ₹10,469 crore, against ₹10,517 crore in the previous year's corresponding quarter.
PNB's Stock Performance Trajectory
PNB's share price has been on a notable recovery path. After a prolonged period of losses, the stock saw a sharp turnaround in February with a 10% surge and maintained positive momentum in subsequent months. It closed in the green in six out of the following eight months, rallying by 43% during this phase.
In terms of yearly performance, the stock has delivered a 17% return in 2025 and is poised for a fifth consecutive year of positive gains. Nevertheless, it currently trades 16% below its 2024 high of ₹143 per share, indicating potential room for growth or ongoing investor caution.
Investors are advised to consult with certified financial experts before making any investment decisions related to the stock market.
