Moody’s to review Punjab National Bank; in wake of RS 11,300 cr scam
It has been termed as one of the biggest scams in Indian banking history and the Rs 11,340 crore scam at the state-run Punjab National Bank (PNB), the rating agency Moody’s today placed the lender under review for downgrade.
It need be mentioned that the Moody’s has a Baa3/P-3 rating on the Delhi-based lender now while it has a Baa3 rating on its foreign currency issuer rating.
The bank overall has a Baa2 rating with a stable outlook now from Moody’s.
Sources said that review on downgrading will primarily focus on the timing and quantum of the financial impact of the fraudulent transactions.
Again, the management actions taken to improve the capitalization profile of the bank will also be reviewed.
Should the bank regulator take any punitive actions on the bank will also be considered, sources said.
The scam came out into the open on 14 February 2018, when the bank informed the stock exchanges.
Moody’s is of the view that the bank’s profitability will likely come under pressure, although the actual impact will depend on the timing and quantum of provisions that need to be made.
Consequently, PNB may need to raise capital. >