India’s banks rattled by $1.8 billion fraud

Feb 14, 2018

One of India’s biggest banks rattled investors Wednesday by announcing the discovery of $1.8 billion of fraudulent activity at one of its branches.

Punjab National Bank’s stock sank more than 7% Wednesday after the company said it “detected some fraudulent and unauthorized transactions” at a branch in Mumbai.

Other Indian financial giants may also be affected by the fraud.

“Based on these transactions, other banks appear to have advanced money to these customers abroad,” Punjab National Bank said.

The bank has identified “a few select account holders” who appear to have been involved, it said in a statement to the Bombay Stock Exchange.

It said it’s referred the matter to “law enforcement agencies.”

A spokesman for the bank declined to provide further information but said it would release a more detailed statement shortly.

Investors also dumped shares in other big players in India’s financial system, which has been burdened with bad loans and needed a $32 billion bailout last year.

State Bank of India, the country’s biggest lender, dropped nearly 2.5%, while Bank of India was down more than 6% by Wednesday afternoon.

Police in Mumbai didn’t immediately respond to a request for comment, while the country’s central bank, the Reserve Bank of India, declined to comment.


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