Punjab National Bank (PNB) has once again created a stir in the banking world. This major public sector bank of the country has informed the Reserve Bank of India (RBI) about loan fraud of about Rs 2,434 crore. The case pertains to two companies belonging to SREI Group – SREI Equipment Finance and SREI Infrastructure Finance, whose former promoters are accused of being involved in financial irregularities.
What information was given by PNB?
According to the information given by PNB to the stock market, the amount of alleged fraud related to SREI Equipment Finance is around Rs 1,241 crore, whereas in the case of SREI Infrastructure Finance this figure is around Rs 1,193 crore. The bank has clarified that 100 percent provisioning has already been done for the entire amount outstanding in both these accounts. This means that this disclosure will not have a direct negative impact on the current financial position of the bank.
The case of these two companies was taken to the National Company Law Tribunal (NCLT) under the Corporate Insolvency Resolution Process (CIRP). Their solution was approved after a long legal process. After getting the green signal for the resolution plan of National Asset Reconstruction Company Limited (NARCL) in August 2023, the boards of both the companies were also reconstituted.
It is noteworthy that SREI Group started its career in the finance sector in the year 1989 and had a strong identity especially in the field of construction equipment financing. However, over time, the group’s position weakened due to poor financial decisions, rising debts and payment defaults. Ultimately in October 2021, SREI Group had to face bankruptcy process.
PNB has also thrown light on its latest financial position. According to the bank, its total provision till September quarter was Rs 643 crore, which is more than last year. With this, the provision coverage ratio of the bank has increased to 96.91 percent, which is being considered a strong sign in terms of asset quality.
PNB’s performance in stock market
Talking about the performance of PNB in the stock market, before this disclosure, the bank’s shares had closed at Rs 120.35 with a slight decline of 0.50 percent. However, since the beginning of the year 2025 till now, the stock has registered an increase of about 17 percent. At the same time, in the last three years, PNB shares have given returns of about 144 percent to investors. At present the total market cap of the bank remains around Rs 1.39 lakh crore.
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