Shares of Punjab National Bank dropped by 4.6 percent on Wednesday, May 10, following the conviction of four individuals, including a former assistant general manager (AGM) of the Banjara Hills branch, by a special CBI court in Hyderabad.
The AGM was sentenced to five years of rigorous imprisonment and was fined for his participation in a bank loan scam that resulted in a loss of ₹53.82 crore.
During Wednesday’s trade, the stock opened at a price of Rs. 49.65 per share against the previous close of Rs. 50.25 and dipped further during the early trading session to touch an intraday low of Rs. 47.90 per share.
It was trading at ₹48.30, down by 3.88 percent, at 11:40 a.m. on the NSE.
The stock touched a 52-week high of Rs. 62 on June 20, 2022 and a 52-week low of Rs. 28.05 on December 15, 2022, indicating that at the current level, the stock is trading over 72 percent above its 52-week low and 22 percent below its 52-week high.
The stock has grown by nearly 9 percent in the last six months. Moreover, it has given a positive return of over 44 percent in the past one year. However, the stock has declined almost 46 percent in the last five years.
On February 19, 2016, the CBI initiated legal proceedings against M/s. Sheetal Refineries Limited and its directors, accusing them of engaging in bank fraud and causing a loss of ₹53.82 crores to Punjab National Bank.
Mr. Garg, Jitender Kumar Agarwal, who was the Managing Director of M/s. Sheetal Refineries Limited at the time, Sudhir Bhuraria, who was an authorized signatory, and Manish Bhuraria have been sentenced to five years of rigorous imprisonment and fined ₹75,000 each.
The former assistant general manager (AGM) of PNB failed to verify the difference between the invoices and confirmation letters, which led to the bank paying an excessive amount to the borrower.
Additionally, he did not impose the condition of using only IBA-approved transporters for the transportation of goods, and allowed the submission of Lorry Receipts from transporters not on the IBA-approved list.
The AGM also exceeded the delegated powers by amending the terms and conditions of LC without approval from the sanctioning authority.
In other news, PNB Housing Finance Limited received a capital infusion from PNB amounting to Rs.498.75 crore through a Rights Issue. The bank subscribed to 1,81,36,365 shares at Rs. 275 per share, aggregating to Rs. 498.75 crore.
Established in May 1894, PNB is the third-largest public sector bank in India in terms of business volumes and the second-largest in terms of network.
According to a MintGenie poll, 15 analysts on an average have a ‘HOLD’ call on the stock.