Indian bank shares recover after news of country’s biggest fraud led to sell-off
Mumbai — Indian bank shares broadly recovered on Thursday a day after being hit by news of the country’s biggest ever bank fraud, although Punjab National Bank (PNB) — the lender at the centre of a $1.77bn scam — has lost 20% of its market value. PNB, India’s second-largest state-run lender with assets of $120bn, disclosed the fraud in a regulatory filing on Wednesday, saying it had referred the matter to law enforcement agencies. Given the scale of the fraud, the fallout from the case could spread and give rise to fresh questions about lending procedures at Indian lenders, particularly public sector banks, mired in soured debt. PNB first notified India’s Central Bureau of Investigation (CBI) of its discovery in late January, and on Monday it issued a "caution notice" to warn other lenders about the suspected fraud. PNB has said that two junior officials at the Mumbai branch had illegally issued "letters of undertaking" to get the overseas branches of other lenders to extend credit ...
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