Banking Shares Fall After Massive PNB Fraud Shock

Shares of the banking sector are facing a continuous downfall since the Punjab National Bank (PNB) scam worth Rs 11,400 crore on February 14, 2018. Later, the stock prices were dropped by 4.6%  falling at Rs 111 counting a total five-day loss to 31 percent. It was reported that in these five sessions, over Rs 12,700 crore of shareholder wealth has been affected. Today, BSE opened with the good drop of 50 points in banking shares.   


Sensex ViewBSE India

The market valuation of PNB fell by Rs 10,938.78 crore to Rs 28,270.22 crore on February 20. Earlier, it stood at Rs 39,209.

According to the BSE shareholding pattern data, the government holds 57.04% stake in PNB, and with the rapid fall in stock prices, it has lost around Rs 6,274.4 crore. The famous insurance company, Life Insurance Corporation of India (LIC) has lost Rs 1,532.3 crore as it owns 13.93% stake in the bank. A holder of 12.56% stake, Foreign Portfolio Investors (FPIs) has seen an erosion of Rs. 1,381.6 crore and small investors have lost about Rs 387 crore.

Moreover, State Bank of India’s (SBI) shares lingered in the lower circuit of percent trading. Trading of other banking stocks also remained below by at least 10%; these banks include Allahabad Bank, UCO and Union Bank of India. SBI has lost around Rs 18,000 crore in market value while Bank of Baroda has seen an erosion of Rs 5, 634 crores.

Tax Department told Times of India (TOI), “Banks could take a hit of more than USD 3 billion from loans and corporate guarantees to diamond companies.”

Such fraud events have impeded the smooth functioning of the banks and their image. International rating agencies Moodys Investor Service and Fitch Ratings Fitch informed The Economic Times, “It will monitor PNB’s full liability, potential recoveries and the extent of additional fresh capital from both internal and external sources to determine if the bank’s financial position is no longer consistent with the current viability rating.”

The post Banking Shares Fall After Massive PNB Fraud Shock appeared first on The Logical Indian.


Source: thelogicalindian.com

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